2016 (12) TMI 153 - AT - Central Excise

Demand - unbranded chewing tobacco - suppression of facts - period of limitation - Held that - mere non-payment of duty is not equivalent to collusion or willful mis-statement or suppression of facts as held by the Hon ble Supreme Court in Uniworth Textiles Ltd. vs. CCE Raipur 2013 (1) TMI 616 - SUPREME COURT . The burden on the department to prove the malafide of the noticee the onus is not on the assessee to prove his bonafide. In the present case we find that the show cause notice did not elaborate the ground on which the demand for extended period was supported. In a similar set of facts this Tribunal in the case of Balaji Products Limited 2016 (11) TMI 406 - CESTAT NEW DELHI held that there are no sufficient grounds to sustain allegation of willful mis-statement/ suppression of facts. In the said case also the liability of additional duty of excise on unbranded chewing tobacco for the period March 2005 to March 2007 was in dispute in connection with demand for extended period. The demand for extended period cannot be sustained - The duty for normal period is liable to be paid - On the same reason imposition of penalty under Section 11AC was also not justified. Accordingly these penalties are set-aside - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
- Allegation of non-payment of Central Excise duty on unbranded chewing tobacco
- Contesting fraud, collusion, willful mis-statement for extended period and penalty imposition

Analysis:
1. The appeals were against orders of Commissioner (Appeals) Delhi-II regarding the levy of additional duty of excise on unbranded chewing tobacco as per Section 85 of the Finance Act, 2005. The appellant contested the allegation of non-payment of duty and fraud, collusion, willful mis-statement for an extended period and imposition of penalty.

2. The appellants did not dispute the duty liability on unbranded chewing tobacco but contested the allegations of fraud, collusion, and willful mis-statement for the extended period and penalty imposition. They argued that they had been regularly filing ER-I returns indicating the manufacture and clearance of unbranded tobacco, even mentioning these facts in forwarding letters and declarations for SSI exemption.

3. Upon examination, the Tribunal found that the first appellate authority did not provide a legal basis for upholding the demand for an extended period and imposing penalties. The Tribunal noted that the mere non-payment of duty does not necessarily imply collusion or willful mis-statement, citing a Supreme Court judgment. The burden of proving malafide is on the department, not the assessee. The show cause notice lacked specific grounds for supporting the demand for an extended period.

4. Referring to a similar case, the Tribunal held that there were insufficient grounds to sustain the allegations of willful mis-statement or suppression of facts. Consequently, the demand for the extended period was deemed unsustainable, and the duty for the normal period was to be paid. The imposition of penalties under Section 11AC was also set aside based on the factual and legal position of the case.

5. Ultimately, the appeals were partly allowed, setting aside the demand for the extended period and the imposed penalties. The duty for the normal period remained payable, and the penalties under Section 11AC were not justified. The decision was pronounced on 18.10.2016 by the Tribunal.