2008 (8) TMI 716 - AT - Central Excise

Summary

Issues:
Appeal against setting aside penalty under Section 11AC by Commissioner (Appeals).

Analysis:
The case involves an appeal by the Revenue against the setting aside of a penalty imposed under Section 11AC by the Commissioner (Appeals). The respondents were engaged in repacking disinfectants and sought clarification on duty liability before the activity was deemed manufacture. The department later informed them about the duty liability and advised registration. The respondents complied, paid duty with interest, and faced penalty proceedings. The original authority imposed a penalty, which was set aside by the Commissioner (Appeals) due to the absence of malafide intent. The Revenue appealed this decision.

The Tribunal noted that the appellants had sought clarifications from the department before the introduction of the relevant Chapter Note. It emphasized that the department, being an expert in Central Excise, should have promptly informed the assessee about the duty liability upon the introduction of the Chapter Note. Despite the delay in notification, the respondents registered, paid the duty for the past period, and interest. The Tribunal highlighted that penalties require a malicious intent, which was absent in this case. It also pointed out that Section 11AC was introduced after the period in question, making it inapplicable retrospectively. Consequently, the Tribunal upheld the Commissioner (Appeals) decision, finding no reason to interfere.

In conclusion, the Tribunal rejected the Revenue's appeal, affirming the decision of the Commissioner (Appeals) to set aside the penalty under Section 11AC. The judgment highlighted the importance of timely communication by the department to taxpayers, the absence of malafide intent in penalty cases, and the non-retrospective application of Section 11AC.