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2011 (3) TMI 134 - HC - Central ExciseDemand of duty with interest and penalty - Exemption - Concessional rate of duty - The assessee is registered with the Central Excise Department for manufacture of knitted fabrics - It availed concessional rate of duty during the period from 1.9.2002 to 31.3.2003 as per notification dated 1.3.2002, under which exemption is available on goods manufactured from inputs on which duty has already been paid - The Hon’ble Supreme Court held that the assessee would not get benefit of exemption if duty had not been paid on inputs, the assessee held a bonafide view about interpretation of the notification - Thus, it may not be a case of deliberate evasion of duty - While the Tribunal rightly rejected the claim of the assessee that exemption was applicable, the setting aside of penalty cannot be held to be illegal - Levy of penalty is not automatic merely because an exemption was wrongly availed, even when plea of the assessee is found to be erroneous. Held that: view taken by the Tribunal that though interpretation of the assessee was erroneous, it did not lack bonafides and in such a situation, levy of penalty was not called for, is a possible view - The appeals are dismissed.
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