Order date – 08 December 2022

Facts –

• The Appellant, M/s Parvatiya Plywood Private Limited, was under bona fide belief that they will be entitled to the Area based exemption, as other units and /or similar units in the same locality were enjoying the Area based exemption.
• Accordingly, this appellant had also claimed the exemption and did not charge excise duty from their customers at the time of clearing the goods.

Issue –

• Whether the demand of duty can be directed to re-quantified by extending benefit of ‘cum-duty value’ and also the benefit of Cenvat credit on inputs/ input service to the appellant?

Order –

• The Tribunal observed that the appellant is entitled to the benefit of recalculation of demand on cum-duty basis in accordance with explanation to Section 4(1)(b) of the Central Excise Act. It finds that admittedly appellant have not collected Central Excise duty in addition to the sale price, in view of their claim of Area based exemption. Thus, the appellant shall be entitled to benefit of calculation of duty on cum-duty-price.
• Further. the appellant shall be entitled to the benefit of Cenvat credit on inputs and input services and the demand payable shall be re-calculated accordingly, in view of the clear mandate of the Central Excise Act r/w Cenvat Credit Rules. The appellant shall be entitled to SSI benefit for the period April, 2015 to December 2015, subject to compliance of other conditions under the said notification, if any.
• The Tribunal held that there is no case of mis-representation, misstatement, suppression or fraud on the part of the appellant. The appellant were under bona fide belief in claiming the Area based exemption from Central Excise duty, as several other manufacturers located in the same locality, where also extended the benefit of Area based exemption. Under such undisputed facts, the Tribunal set aside the penalty under Section 11AC both on the appellant-company and its Managing Director.
• Hence the appeal is partly allowed.