CESTAT upholds demand of Excise Duty along with Interest on Integral Coach Factory [Read Order]

In  a significant case, the Chennai Bench, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) upheld the demand for excise duty along with interest on Integral Coach Factory

In the Integral Coach Factory, the appellants are engaged in the manufacture of railway coaches and are registered with the Central Excise Department. From intelligence it was found that they were clearing railway coaches without payment of duty, the officers of the Preventive Unit visited the premises and verified the records.

It was found that for the period 20.04.2011 to 31.12.2011, the appellant had not been paying Excise  Duty on the finished goods cleared from their factory. Show cause notice was issued proposing to demand the duty along with interest and also for imposing penalties and was confirmed by the original authority.  The original authority ordered for payment of appropriate interest and imposed a penalty of Rs.10,000/- under Rule 25 of Central Excise Rules, 2002. 

It was contended that the appellant comes under the Ministry of Railways belonging to the Central Government.  The goods cleared by the appellant were exempt from the levy of Excise  Duty as per Notification No.62/1995-CE dated 16.03.1995. The appellant was under the bonafide belief that even after the Budget 2010-2011, they were exempt from the levy of Excise Duty.

Further stated that the appellant being part of the Central Government, only after obtaining the sanction from the Central Government, the allocation could be made in the Budget by the Ministry of Railways for payment of the excise duty.  The entire duty demand was paid on 31.01.2012 and there was no intention on the part of the appellant to evade payment of duty or not to pay the excise duty. 

A Coram comprising of Mrs Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao,  Member (Technical) observed that the demand raised is within the normal period. Further, there is no penalty imposed under Section 11AC of the Central Excise Act, 1944.

The Tribunal upheld the order of the Commissioner which confirmed the demand of interest and imposition of penalty.  The appeal of the assessee got dismissed. 

To Read the full text of the Order CLICK HERE

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Integral Coach Factory vs Commissioner of GST & Central Excise , 2023 TAXSCAN (CESTAT) 266 , Ms. Meera Gananasekar , Ms. K. Komathi