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The Commissioner of Central Excise, Bangalore v/s M/s Apollo Power Systems (P) Ltd.

    Appeal No: E/51 of 2007

    Decided On, 19 February 2008

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore


    Mr. K.S. Reddy, JDR, for the Revenue, None for the Appellants.

Judgment Text


In this case the revenue has come in appeal against the impugned order of the Commissioner (Appeals) on the ground that he had set aside the penalty under Rule 25 of CE Rules by the Original Authority. It is the contention of the revenue that in the facts and circumstances of the case, penalty ought to have been imposed. Brief facts of the case are as follows:-

2. The respondent obtained control panels. After some modification, inspection and testing these goods were cleared to 100% EOU on the strength of CT-3 Certificate. On receipt of the goods, the respondent took Cenvat credit also. When the audit visited the unit it was found out that the credit taken was irregular. The respondent did not manufacture any item. They had purchased the finished product and took credit on the same even without undertaking any manufacturing activity. Once the irregularity was pointed out, they reversed the credit and also paid the interest due to the department. Proceedings were initiated against the respondent. The lower authority confirmed the payment and also imposed penalty. The Commissioner (Appeals) set aside the penalty imposed under Rule 25 on the ground that the issue is one of interpretation of statutes and therefore penalty is not warranted. The respondent has also filed cross objections with an application for condonation of delay of 11 days. As the delay is marginal the same is condoned.

3. On a very careful consideration of the entire issue, I am in agreement with the revenue that credit taken by the respondent is irregular. However from the records it is seen that the respondent was under the impression that inspection, testing etc., would amount to manufacture even though it appears that such a view is absurd. The fact remains that it is a question of interpretation. Some times the meaning given to words in central excise and customs very much deviate form the meaning which is normally given by laymen. For example in certain cases, even packing and labeling amounts to manufacture. However to a lay person this may appear absurd because there is no manufacturing process. Conversely, there is always a possibility that people can come out with bizarre interpretation. Consequently, the reasoning of the Commissioner (Appeals) in setting aside

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penalty appears to be legal and proper. Moreover, the respondent has taken remedial steps when the irregularity was pointed out. Hence I do not find it necessary to interfere with the impugned order setting aside the penalty. The revenues appeal is rejected.