Case Law Details
CCE-Jammu Vs Khyber Industries (P) Ltd (CESTAT Chandigarh)
In a significant decision, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chandigarh has addressed the necessity of mens rea (guilty mind) for imposing penalties under Rule 25 of the Central Excise Rules. This verdict comes from the case of CCE-Jammu Vs. Khyber Industries (P) Ltd.
1. Background: The case involves an appeal by the Revenue against an order dated 27.11.2010 issued by the Commissioner of Central Excise, Jammu. The order confirmed a demand of Rs. 1,09,49,725/- against the respondent under Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB. However, the Commissioner refrained from imposing penalties under Rule 25(1)(a), 25(1)(d), and 27 of the Central Excise Rules, and it’s these penalties that the Revenue has challenged in the appeal.
2. Facts of the Case: The respondent, M/s Khyber Industries (P) Ltd., Srinagar, is engaged in the manufacture of Cement and Clinker. They were availing the benefit of an exemption Notification dated 14/11/2002, which was subsequently amended. The dispute arose over the calculation of refunds for the months of April and May 2008, before and after the amendment.
3. Revenue’s Argument: The Revenue argued that the penalties under Rule 25 and 27 should have been imposed. They contended that the respondent misinterpreted the Notification for their convenience and failed to produce any written clarification from the CBEC regarding the retrospective effect of the amendment. The Revenue also asserted that the respondent contravened the rules and exemption notification with the intention to evade duty payment.
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