The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench has recently, in an appeal filed before it, held that no fine or penalty can be imposed when the goods in question are not liable for tax imposition or confiscation.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it by Atco Industries Ltd., as against the t the Order-In-Original No. DMN-EXCUS-000-COM-26-18-19 dated 18.12.2018 of Commissioner of Central Excise, Daman passed in De-Novo Proceedings, in pursuance of the Tribunal’s Final Order No.A/1599-1605/WZB/AHD/11 dated 16.09.2011.
The main issue involved in the appeal being the question as to whether “Polycarbonate Containers” were received back by Appellant – Atco Industries Ltd, in terms of Rule 173H of the Central Excise Rules, 1944 on account of rejection by buyers due to quality issues and were repaired and cleared in terms of Rule 173H as contended by the Appellant or whether in fact, fresh Containers manufactured and cleared in the guise of repaired containers as alleged by Revenue and therefore liable to duty, it was submitted by the appellants that complete procedure under Rule 173H had been followed by it and that the show cause notice has not disputed the genuineness of the said documents/ records.
However, the Revenue reiterated the finding given in the Order of the Commissioner, pointing out that the Commissioner had in the Order-in-Original rightly held the rejected Bottles to be not physically carried and received in the factory, as on the verification with RTO, it was found that out of the vehicles mentioned in statement of T. N. Patel, except for two trucks, the rest of the vehicles were found to be either two wheelers or taxis or tempos which could not have transported the rejected goods.
The Revenue further pointing out that rejected bottles were not supported by any lorry receipt/other transportation document and that there was no proof of payment of freight, the Tribunal observed:
“We have heard both the sides and perused the records. At the outset, we find that the entire case built up by the department on the face of it, is improbable.”
“As is evident from the record, up to February 1999 AIL was clearing the Polycarbonate Bottles under the belief that the same were exempt from duty and duly reflecting such duty-free clearances in the RT-12 Returns. There could therefore be no motive or reason for AIL to wrongly declare freshly manufactured Bottles as repaired Bottles under Rule 173H.”, it added.
“We further observe that upon perusal of records, it is clear that on receipt back of the Bottles earlier cleared, AIL had duly filed with the Excise department, the intimation of receipt of the goods in Form Annexure A, and that the said Forms Annexure A were duly received by the department as is evident from Received Stamp/ signature of the Inspector. Also, the department has not produced any evidence to show procurement of excess quantity of raw materials required to manufacture the quantity of Bottles which the it alleges to be not return of repaired goods but freshly manufactured goods”, adding to its observation the Bench said.
Finally, allowing the assessee’s appeal with consequential relief, the Tribunal held:
“Since no duty was payable on the said goods and since the said goods are not liable to confiscation, the imposition of fine and penalties on appellants are liable to be set aside. we are of the considered view that the impugned order is not sustainable, hence the same is set aside.”
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