M/S Adani Wilmar Ltd vs Commissioner Of Central Excise
- CitationAppeal No. : E/901/2012
Ratio decidendi
The rule this decision rests on
Where duty has been paid in full with interest, and the assessee's non-payment rested on a bona fide belief that the goods were not dutiable in light of a binding Supreme Court decision holding that the activity did not amount to manufacture, a penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 cannot be sustained, as the absence of any mala fide intention to evade duty removes the basis for imposing it.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[ Arising out of OIA-116/2012-AHD-III-/SKS/COMMR-A-/AHD 06/09/2012 Passed by Commissioner of Central Excise-AHMEDABAD-III ]
M/s Adani Wilmar Ltd - Appellant(s)
Vs.
Commissioner of Central Excise- - Respondent(s)
AHMEDABAD-III
Represented by
For Assessee : Shri S J Vyas, Advcoate For Revenue : Shri Govind Jha, Authorised Representative
For approval and signature :
Mr. H.K. Thakur, Hon.ble Member (Technical)
1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes
CORAM :
Mr. H.K. Thakur, Hon.ble Member (Technical)
Date of Hearing / Decision : 25/6/2015
ORDER No. A/10957 / 2015 dtd 25/6/2015
Per : Mr. H K Thakur;
This appeal has been filed by the appellant against OIA No. 116/2012-AHD-III-/SKS/COMMR-A-/AH dtd 7.9.2012 under which OIO No 26/AC/DEM/CE/2011 dated 30.11.2011 was upheld.
2. Shri S J Vyas, Advocate, appearing on behalf of the appellant argued that the appellant has paid the entire duty liability alongwith interest but is only contesting penalty of Rs 4275/- upon the appellants under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act 1944. It was his case that duty liability on Spent Earth was not attracted as per the judgement of Honble Apex Court in the case of CCE, Chandigarh I vs Markfesd Vanaspati and Allied Industries Ltd in Appeal No 77-80/2000, 765,768/2001 and 1074/2001. That in this judgement Honble Apex Court has held that before duty liability the act of manufacture and marketability has to be established before any Central Excise Duty is chargeable. That with respect to Spent Earth it was held that no manufacturing activity is involved and the appeal filed by the Revenue was dismissed. That appellant was under the bonafide belief that no duty liability is attracted on Spent Earth. That to buy peace appellant paid Central Excise duty but no penalty is required to be imposed on the ground that the appellant was under the bonafide belief that such duty liability is not attracted.
3. Shri Govind Jha, Authorised Representative , appearing on behalf of the Revenue relied upon the case law CCE Jalandar vs AG Flats Ltd [2012(277)ELT.96] to argue that duty liability is attracted on the bye product that emerged during the manufacturing process of the main product as per the amended Section 2(f) of the Central Excise Act 1944. It was thus argued by the Learned Authorised Representative, the penalty has been correctly imposed.
4. Heard both sides an perused the case records. Appellant in this proceeding is not contesting the chargeability of duty on Spent Earth. It is observed from the Honble Apex Court judgement dt.5.4.2000 in the case of CCE, Chandigarh I vs Markfed Vanaspati and Allied Industries Ltd (supra) that the issue of chargeability of duty on spent earth was settled by the Apex Court. In view of this judgement and bonafide belief on the part of the appellant that no duty liability is attracted on spent earth even after amendment of Section 2(f) of the Central Excise Act 1944. The case law of CCE Jalandar I vs AG Flats Ltd (supra) passed in 2012 makes it clear that there was chargeability of duty on the bye product. The appellant during the period May 2008 to May 2009 may not have any to malafide intention to evade payment of Central Excise duty when by the judgement of Apex Court in the case of CCE Chandigarh I vs Markfed Vanaspati and Allied Industries Ltd (supra) it was held that spent earth is not by an act of manufacturer.
5. In view of the above penalty imposed by the lower authorities under Rule 25 of the Central Excise Act of 2002 read with Section 11AC of the Central excise Act 1944, is not sustainable and is required to set aside. In view of the above, appeal filed by the appellant is allowed only to the extent of setting aside the penalty imposed upon the appellant.
(Dictated and pronounced in the Court)
(H.K. Thakur) Member (Technical)
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