The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside demand of duty for period prior to starting of commercial production.
The appellant, M/s Tribhuvan Metal Industries is engaged in the trading and manufacture of aluminium circles falling under Chapter 76 of the First Schedule to the Central Excise Tariff Act, 1985 and were registered with the Department. On the basis of an intelligence, a simultaneous search was conducted by the officers of Central Excise at the factory premises of the appellant and residential premises of Balbir Prasad Gupta and Jai Prakash Sharma (Partners of the appellant).
The department has seized various documents from the residential premises of the partnerBased on further investigation, a subsequent show cause notice was issued alleging that the appellant has started manufacturing from July, 2010 and it has been proposed that why duty demand of Rs.10 lakhs for the period July, 2010 to May, 2011 should not be demanded alongwith the interest and penalty on the firm and partners as well.
The issue in this appeal is whether demand of duty Rs.3 lakhs have been rightly made for the period July, 2010 to October, 2010, with penalty under Section 11AC read with Rule 25.
The Counsel for the appellant further urged that it is evident from the record that appellant had done some test production prior to 11.11.2010 and started the commercial production from 11.11.2010, they have paid duty under CLS. Thus, the demand of duty have been erroneously confirmed. Further, the appellant has produced sufficient evidence by filing IT return and Sales Tax record supporting their turnover. Thus, the confirmation of duty of Rs.32 lakhs is bad alongwith penalty.
The Tribunal of Anil Choudhary, Judicial Member observed that “Thus, more or less – the appellant has done only test production prior to 11.11.2010 and they have been doing mainly trading of finished goods as the factory was not fully set up at the testing stage. Further, I find that Revenue has taken contrary stand wherein in the first show cause notice it is admitted that assessee has started commercial production from November, 2010 wherein in the second show cause notice, duty have been demanded from July, 2010.”
Accordingly, the Bench allowed the appeal and modified the order in appeal as follows:-“i) The quantum of finished goods liable to duty for the period 01.07.2010 to 31.10.2010 shall be NIL. ii) As the duty demand from July, 2010 to October, 2010, have been set aside. The penalty under Section 11AC read with Rule 25 is set aside.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
