THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, HYDERABAD-II, COMMISSIONERATE, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD Vs. M/S. CRAFTS INTERIORS (P) LIMITED

JUDGEMENT

(1.) These three appeals arise out of the common order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 10.05.2005 disposing of the appeals filed by the respondent.

(2.) The respondent is engaged in the business of interior decoration, manufacture and supplier of furniture. With respect to certain of the works undertaken by the respondent, the order in original dated 26.03.2004 came to be passed and extended period of limitation was invoked. The duty penalty under section 11AC of the Central Excise Act, 1944 (for short the Act) and also under Rule 173Q apart from penalty under Rule 209A of Central Excise Rules, 1944 were determined and demanded from the respondent. Aggrieved by the order in original, the respondent filed appeals before the CESTAT, Bangalore. The adjudicating authority, after considering the material on record and analyzing the facts, found that the major extent of demand pertains to the work, in fact, executed at site and thus not liable for excise duty and thus, such transactions are not liable for levy of excise duty. However, with respect to part of the transactions, the adjudicating authority found the same liable to excise duty and demanded tax duty and penalty. The order of the adjudicating authority was challenged before the CESTAT, Bangalore and after detailed analysis of the facts the Tribunal came to the conclusion that certain factual aspects are required to be reworked out and thereby, a revised demand is required to be made determining the duty liability while remanding back the case to the adjudicating authority for re -determination of the transactions, which are actually liable for tax. The Tribunal on appreciation of the facts directed to limit the penalty not to exceed 10%.

(3.) Now the Department is in appeal raising the substantial question of law that Whether the CESTAT has power to reduce the mandatory penalty equivalent to duty imposed under Section 11 AC of he Central Excise Act, 1944, especially when the invocation of the longer period on the ground of suppression of fact was justified in view of the Honble Supreme Court judgment reported in case Sony India Ltd., {2004(167)E.L.T.385(S.C.)}