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2016 (7) TMI 1071 - CESTAT CHENNAI

2016 (7) TMI 1071 - CESTAT CHENNAI - 2016 (344) E.L.T. 1140 (Tri. - Chennai) - Levy of penalty u/s 11AC - malafide intention or not - dispute were related to Classification - manufacture of car Air-conditioning machine and their parts - manufactured products are cleared along with the bought out items in a kit packing. The bought out items are sold as such without any value addition. - Held that:- the appellants have made suitable declarations at the time of changes made during Budget 2000 and t .....

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favor of assessee. - Appeal No. E/398/2012 - Final Order No. 41246/2016 - Dated:- 14-7-2016 - Shri P. K. Choudhary, Judicial Member And Shri C. J. Mathew, Technical Member For the Appellant : Shri Raghavan Ramabhadran, Advocate For the Respondent : Shri A. Cletus, ADC (AR) ORDER Per P.K. Choudhary The appeal is filed by appellant against OIO No.6/2004 dt. 30.12.2004 passed by Commissioner of Central Excise, Chennai-III. The demand of duty stands appropriated in the order. The issue is relating .....

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ght out items are sold as such without any value addition. The kit comprising of the manufactured and the bought out items are listed below: a. Evaporator assembly b. Liquid Tube c. Hose discharge d. Condenser e. Compressor f. Receiver drier g. Clutch assembly h. Bracket condenser mounting i. Bracket suction hose mounting j. Grommet k. Drain hose l. Bracket compressor mounting m. V-Belt 2.1 It was submitted by the appellant that during the period in dispute (1.3.2000 to 30.6.2000), both the air .....

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han headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; Prior to the impugned period, the appellant paid excise duty of 18% as well as special excise duty ( SED ) of 6% levied under the Second Schedule to the Central Excise Act. 2.2 It was the submission of the appellant that, on 29.2.2000, the Finance Minister in his budget speech announced that the parts of air conditioner will be exempted from SED. Para .....

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lso including tyres for OE supplies and parts of air conditioning and refrigerating machinery in the list of 16% CENVAT, without subjecting them to any special excise duty, since they are intermediate goods in the chain of production. Consequently, since the appellant has all along been classifying their products, they filed a 173B declaration dated 1.3.2000 and did not pay SED therefrom. To give effect to the Finance Minister s Budget Speech, the Department vide Notification No. 6/2000-CE dated .....

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will start paying SED for the clearances henceforth. In that letter, the appellant also informed the Department that they undertake to pay the differential SED for the period from 1.3.2000 to 30.6.2000. On 19.7.2000, the appellant voluntarily calculated and paid the differential duty. 2.4 On 5.12.2002, the department issued a show cause notice proposing to appropriate the duty paid and to impose interest under Section 11AB and equal penalty under Section 11AC. The Original Authority passed the .....

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l. 3. Shri Raghavan Ramabhadran, Ld. Advocate appearing on behalf of the appellant submitted that the appellant always classified their products as parts of car Air Conditioner and never as a complete air conditioner machines. The sequence of events that happened from 1st March 2000 till 19th July 2000 are clear enough to show that the offence case was booked against the appellant only based on the declaration (dated 1.7.2000) received by the department on 10.7.2000. Consequently, there is no in .....

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). 3.2 He submits that during the impugned period, the provisions of Section 11AC and under Section 11AB were attracted only in the case of fraud, misstatement, etc. with an intention to evade payment of duty and in the present case, such elements are absent. In other words, unless these ingredients are present, no penalty or interest can be imposed on any assessee. 3.3 Even though the issue pertained only to imposition of interest and penalty, the appellant argued on the merits of the matter as .....

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on or wilful misstatement can be alleged against them. The Tribunal held that in such a case, no interest or penalty is imposable. Similarly, the appellant also relied on the following cases: (i) Delphi Automotive Systems v. CCE 2004 (163) ELT 47 (Tri. Del.) (ii) CCE v. Delphi Automotive Systems 2013 (183) ELT 239 (SC) 4. Shri A.Cletus, ADC, the learned Authorized Representative appearing for Revenue argued that the appellant has deliberately misstated the product s description after Budget 2000 .....

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e the declaration within 30 days but has filed only on 10.7.2000 i.e. after a lapse of 4 months; that the appellant upto the period 1.3.2000 declared the goods as assemblies. He referred to page 36 of appeal paper book and referred to para-22 of the order wherein finding on wilful misstatement is recorded. He also referred to page 35 of appeal paper book and referred to paras 17 to 20 and submits that plea of the counsel that they are law-abiding cannot be accepted. 5. In counter, the ld. counse .....

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2000-CE is incorrect. The appellant has all along been classifying their product as parts. The 173B declaration filed vide letter dated 6.4.1999 which is much prior to the Budget 2000 clearly disclosed the appellant s product as parts of air conditioner assembly . He submits that when there is no misstatement, no penalty is imposable. In the light of the above arguments, he prayed for dropping the imposition of interest and penalty against them. 6. We have carefully gone through the records and .....

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nt 1. 01.03.2000 Filing of Classification Declaration by the assessee under Rule 173B consequent to Budget 2000 2. 01.07.2000 (received in Range on 10.7.2000) Letter intimating that they had started paying duty on car air conditioner assembly attracting 32% from 1.7.2000 and seeking procedure to pay the differential duty from 1.3.2000 to 30.6.2000 3. 15.07.2000 Statement recorded from Shri N. Ramachandran 4. 18.07.2000 Offence case POR No.09/2000 registered. Form AE-2 issued. 5. 19.07.2000 Diffe .....

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3.2000, the same did not absolve them of their liability of payment of appropriate duty which is a basic requirement under Self Assessment procedure". With the above observation, the Learned Commissioner has imposed an equal amount of penalty u/s. 11AC of the Central Excise Act, 1944 on the ground that payment of taxes were made only after the visit of the authorities on 15/07/2000. In support of his argument, the Learned Commissioner has relied on the following judicial precedents: a) M/s. .....

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on under Rule 173B of the Central Excise Rules on 01 March 2000 and on 01 July 2000. While the former declaration was filed on the ground that the said levy of Special Excise duty was not applicable to them, the latter declaration was filed to the effect that the Appellant had agreed to pay the Excise duty @ 32% (including the Special Excise Duty). This in our view is a sufficient ground for setting aside penalty imposed, as the circumstances which warrant the invocation of penalty u/s. 11AC is .....

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We now request you to advise us the procedure under Central Excise law to pay the differential duty to enable us debit our CENVAT Account". On your advice we will pay the said amount provided the necessary certificates be issued by your goodself to enable our customer take credit of the amount of differential duty." This is the communication which has triggered the entire proceeding against the Appellant. However, we find that the disclosure made in the letter is clear and precise and .....

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s paid before the issuance of SCN, the same would not render the imposition of penalty bad in law. In those cases referred to by the Commissioner, duty was deposited only after the investigation/audit by the Department. However, in the instant case, the Appellant on their own have disclosed the facts to the Department and only after the knowledge of the said fact, the Department had initiated action against the Appellant after which duty was paid which in our view is not applicable to the case i .....

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tended that both Plant I and Plant II supply different parts of car air-conditioners and at no point of time, all the parts of the car air-conditioners are supplied by any single plant and that the clubbing of the clearances made by two units is erroneous and contrary to well settled legal position, the learned Advocate has emphasised that as there was no suppression or wilfull misstatement on their part, imposition of penalty on the Appellants under Section 11AC of the Central Excise Act is not .....

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rts, thereby knowingly evaded the payment of SED during the period 6-3-2000 to 3-8-2000. The Commissioner has given his findings that both plants were manufacturing a complete air-conditioner system in the individual units relying the declarations filed by them on 1-3-2000, 6-3-2000 and 4-8-2000 and they paid the duty only when they came to know that a show cause notice was being contemplated. It is not the case of the Revenue that the Appellants did not file the declarations as required under R .....

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erefore be made the basis of suppression or misstatement. We also observe that the matter regarding payment of Special Excise Duty was being discussed between the Department and the Appellants. In their letter dated 14-6-2000, in response to letters from the Range Superintendent, they had claimed that assemblies or sub-assemblies are not air-conditioning system as defined under Heading 84.15 of the Central Excise Tariff. We also note that the Central Board of Excise & Customs, has itself und .....

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tification No. 6/2000-CE. We also note that the Appellants, in their letter dated 4-8-2000 has again referred to their earlier declarations in which the benefit of exemption of SED on parts and accessories was claimed by them. They had also mentioned in the said letter that they had been given to understand by the Department to debit the Special Excise Duty. Then they had chosen to pay SED with effect from 4-8-2000 under protest and filed a revised declaration under protest. No mileage from the .....

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imposition of penalty under Section 11AC of the Central Excise Act. It has been also the consistent view of the Tribunal that when classification list/declaration has been filed by the manufacturer, extended period of limitation cannot be invoked meaning thereby that none of the ingredients mentioned in the proviso to Section 11AC(1) of the Central Excise Act can be alleged against the manufacturer. It has been held by the Supreme Court in Padmini Products v. CCE - 1989 (43) E.L.T. 195 (S.C.) t .....

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