2017 (2) TMI 141 - AT - Central Excise

Validity of SCN - imposition of penalty u/r 27 - reduction in litigation u/s 11 (2B) of the Central Excise Act 1944 - differential duty liability arose on account of increase in duty rates on Tapioca Sago. A part of duty liability along with interest has been discharged before issue of SCN and remaining part thereon has been discharged within one month from SCN - whether issuance of SCN valid? Held that - it would have been most appropriate if the SCN had not been issued in these cases. Instead these Appellants perforce have been required to come before this forum for relief. In the circumstances while there should be no controversy with regard to the differential duty which has been discharged by the appellant on being pointed out along with interest amounts thereon issue of SCNs for imposition of penalties under Section 11AC is an overkill. When in the first place there was no requirement of issue of SCN itself penalty will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Non-payment of differential duty on "Tapioca Sago" falling under Chapter Heading 1903 0000 during the period from 1.3.2011 to 16.3.2012.

Analysis:

Issue 1: Differential Duty Liability
The appeal pertains to the non-payment of differential duty arising from an increase in duty rates on "Tapioca Sago" during the specified period. The appellant had paid a portion of the duty and interest before the issuance of the Show Cause Notice (SCN) and the remainder within one month of the SCN but before the Order-in-Original (OIO) was issued.

Issue 2: Legal Provisions
Section 11(2B) of the Central Excise Act, 1944 is crucial in this case. This section allows a person liable for duty to pay the amount based on their own ascertainment or as determined by a Central Excise Officer before the service of a notice under sub-section (1). If such payment is made and informed to the officer, no notice shall be served under sub-section (1) for the duty paid.

Issue 3: SCN Issuance
The Tribunal noted that the duty liability was discharged by the appellant upon being pointed out, both before and after the SCN was issued. The Tribunal highlighted that the issuance of SCNs for penalties under Section 11AC was unnecessary, especially considering the duty had been paid along with interest. The imposition of penalties under Rule 27 of the Central Excise Rules, 2002 for non-filing of ER-8 returns was also deemed excessive given the circumstances.

Issue 4: Tribunal's Decision
The Tribunal found that the issuance of SCNs was unwarranted in this case, as the differential duty had been paid by the appellant promptly. The Tribunal allowed the appeal, providing consequential relief as per the law. The decision emphasized the need to avoid unnecessary litigation and penalties when duty liabilities have been discharged in a timely manner.

In conclusion, the Tribunal's judgment focused on the timely payment of the duty liability by the appellant and the applicability of Section 11(2B) of the Central Excise Act to prevent unnecessary issuance of SCNs and penalties. The decision underscored the importance of reducing litigation and ensuring fairness in dealing with duty-related matters.