Order Date – 16 September 2022

Facts –

• The Appellant, M/s Rani Packaging Industries, is engaged in manufacturing of corrugated paper roll, corrugated paper box and corrugated sheet etc. hey had not taken registration with the central excise department for the clearances made by them during the period from 2011-12 to 2014-15.
• After the investigation conducted by the Anti Evasion Wing of the Excise Department on 04/12/2014, it was revealed that the Appellant is liable to pay excise duty on the clearances made by them and take registration under the Central Excise Act and Rules made thereunder.
• The Appellant also paid an amount of Rs.12,50,000/- towards the duty liability before issue of the shoe cause notice. 
• Subsequently Show Cause Notice dated 08.12.2015 was issued by the department alleging non-payment of excise duty of Rs.8,71,866/- along with interest and for imposing penalty under section  11AA and section 11AC of the Central Excise Act, 1944.
• The amount already paid by the Appellant was proposed to be appropriated against the above liability as determined in the Show Cause Notice.
• Being aggrieved with the subsequent Order, the present appeal was filed before this Tribunal.

Issue –

• Whether the penalty under Section 11AC of the Act is imposable on the Appellant when the entire duty and interest was paid before the issuance of the Show Cause Notice itself.

Order –

• The Hon’ble Tribunal observed that the facts of the present case are squarely covered by the aforesaid decision of the Tribunal in the case of Kunnath Textiles Vs. Commissioner of Cus. & C. Ex., Cochin [2013 (294) E.L.T. 308 (Tri. - Bang.)]; wherein the Tribunal held that the plea for vacating the penalty is tenable. It was further held in the said case that the benefit of Notification No. 67/95-C.E. was claimed in respect of the intermediate product, the value of which was sought to be included in the gross value of clearances for purposes of the SSI notification.
• The substantive dispute between the department and the assessee revolved around the question whether the value of the intermediate product was liable to be included in the gross value of clearances for the fiscal year in question. Essentially, therefore, a decision depended on interpretation of the relevant conditions of the SSI notification. It has been consistently held by that Tribunal and various High Courts and the Supreme Court that an assessee shall not be penalized in a case where the demand on them depended on interpretation of the conditions of the exemption notification claimed by the assessee. The Tribunal found that case to be one of the instances. Hence, the penalty was set aside and appeal was allowed.
• The Tribunal set aside the Impugned Order to the extent of imposition of penalty.