BEST UNDERTAKING Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE dispute in the present appeal relates to imposition of personal penalty of Rs. 4,60,000/ - (Rupees four lakhs sixty thousand only) imposed on the appellant and confirmation of interest. The appellant is a undertaking owned, controlled and managed by and constituted under Mumbai Municipal Corporation Act, 1988. They are engaged in the manufacture of nuts and bolts bus Washing Machine, buses trolleys etc. in their Dadar workshop. The said manufactured goods are not sold by them but used for the maintenance of the buses being run by the Municipal Corporation. The dispute relates to the excisability of the said goods resulting in confirmation of demand of duty of Rs. 48,28,550/ -(Rupees forty eight lakhs twenty eight thousand five hundred fifty only) for the period 1996 -2000. The appellant have deposited the said duty demand before the issuance of the show cause notice and hence it is their contention that imposition of penalty or confirmation of interest under the provisions of Section 11AC and Section 11AB is not warranted.

(2.) SHRI R. Rustomji, Ld. Advocate appearing before us has relied upon the various decisions of the Tribunal in support of his submission that where duty stands deposited before the issuance of the show cause notice, provisions of Section 11AC and 11AB are not attracted. On the other hand, the Ld. DR as relied upon Madhya Pradesh High Court decision in the case of Sai Machine Tools Pvt. Ltd. v. Commissioner of Central Excise and Customs, Indore 2006 (203) ELT 15 (MP.).

(3.) BEFORE applying the ratio of the decisions relied upon by the Ld. Advocate appearing for the appellant, we would like to recapitulate certain facts having a bearing on the issue of penalty. Admittedly, appellant is a local authority constituted under Mumbai Municipal Corporation Act, 1988, and as such is a "State" under Article 12 of the Constitution of India. As such, there could be no motive on their part to evade duty with an intention to defraud the Government. Further as contended by them, there could be a reasonable belief on their part to interpret the view that being a "State" and manufacturing goods for their own captive consumption, no duty is required to be paid by them, though the Commissioner in his impugned order has observed that the appellant was a declarant and was paying duty for some period in between. Nevertheless, no mala fide can be attributed to the appellant. It is further seen that the appellant deposited the entire amount of duty even before the issuance of the show cause notice.