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2015 (11) TMI 1340 - CESTAT MUMBAI

2015 (11) TMI 1340 - CESTAT MUMBAI - TMI - Imposition of penalty u/s 11AC - differential duty was paid suo motu as pointed out by the Audit Team without disputing liability - Clearance of goods to sister concern much prior to issue of show-cause notice - Clearance of goods in unpacked condition - malafide intention - Section 11A(2B) - Held that:- Goods were cleared by the appellant which was input for the consignee sister concern therefore the valuation was governed by Rule 8 of Central Excise V .....

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an pay the differential duty only some- where-in September - October, 2009 when the Balance Sheet is audited and annual report is submitted to the Income Tax department. In the present case the audit was conducted in the months of September - October, 2009 and on pointing out the discrepancy of valuation, the appellant suo moto paid the duty along with interest.

Case of the appellant is squarely covered by Section 11A(2B), according to which the appellant should not have been issued .....

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cial) For the Petitioner : Ms. Anjali Hirawat, Advocate For the Respondent : Shri Ashutosh Nath, Assistant Commissioner (A.R.) ORDER Per: Ramesh Nair The appeal is directed against Order-in-Appeal No. BC/356/MUM-III/2011-12 dated 29.02.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III, wherein the learned Commissioner (Appeals) allowed the appeal filed by the Revenue by imposing penalty of equal amount of duty involved. The appellant filed this appeal only for waiver of pen .....

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er, 2009, it was pointed out by the Audit Team i.e. a short payment of excise duty which the assessee paid the differential duty along with interest on the basis of Chartered Accountant Certificate on 05.10.2009. A show-cause notice dated 17.02.2011 was issued for demanding the differential duty of ₹ 1,11,796/- and also proposed penalty and interest. In the show-cause notice, it was also proposed to appropriate amount of duty involved ₹ 1,11,796/- and interest of ₹ 31,735/- alr .....

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s of Rule 8 on the basis of data available at the time of clearance of the goods. However on the completion of financial year, on the basis of final data, it was found that there is a differential duty short paid. She submits that it was pointed out by the Audit Team but thereafter the appellant has suo motu without disputing liability paid the duty as well as interest before the issue of show-cause notice. It is her submission that since duty and interest was paid admittedly without contesting .....

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reason also, the penalty under Section 11AC should not be imposed. She further submits that in the show-cause notice, there is no allegation as regard ingredient of proviso to Section 11A such as suppression of fact, mis-declaration, fraud, collusion, etc. with intent to evade payment of duty. Therefore for this reason also the penalty under Section 11AC cannot be imposed. In this support she relied upon a judgement in the case of Amrit Foods Vs. CCE, U.P. - 2005 (190) ELT 433 (SC) wherein the H .....

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at in case of Revenue neutrality penalty under Section 11AC is not sustainable. She also relied upon the judgement of Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise, Customs & Service Tax Vs. Patel Alloys Steel Pvt. Ltd. - 2014 (305) ELT 476 (Guj.) wherein it was held that in the fact of transfer of capital goods to their sister unit for undertaking job work penalty not imposable. Following the above Hon'ble Supreme Court, Co-ordinate Bench of this Tribun .....

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ave also not resorted to the provisional assessment. Therefore they have suppressed the fact of not disclosing the incorrect valuation of the goods. Therefore the learned Commissioner (Appeals) has rightly imposed the penalty of equal amount of duty invoking under Section 11AC. As regard the submission of the learned Counsel on Section 11A(2B), he submits that the appellant has paid duty and interest only after pointing out by the Audit Team, had the Audit Officer not pointed out the discrepancy .....

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ssion made by both the sides. 6. I find that the goods were cleared by the appellant which was input for the consignee sister concern therefore the valuation was governed by Rule 8 of Central Excise Valuation Rules, 2000 which provides the valuation i.e. 110% of cost of manufacturing. The goods were cleared in July, 2007 and the appellant has calculated the cost of manufacturing on the basis of data for the financial year, 2006-2007 which is the correct procedure. However the appellant was suppo .....

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ation, the appellant suo moto paid the duty along with interest. In view of this fact, I do not find any malafide on the part of the appellant and I am of the view that the case is squarely covered by the provision of Section 11A(2B) which is reproduced below:- SECTION [11A.................................................................. (2B) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, .....

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ny, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "one year " referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. From the above provisions, it is clear that not only the assessee but also if the departmental Officers ascertain the duty which is short paid or short levied and the same is paid b .....

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could have been imposed. I also agree with the learned Counsel of the appellant that show-cause notice has not alleged that the omission and commission of the appellant falls under the 4 corner of the ingredients of provision to Section 11A such as suppression of fact, mis-declaration, fraud, collusion, etc. with intent to evade payment of duty. Ratio of Hon'ble Supreme Court judgment in the case of Commissioner of Central Excise, Pune Vs. SKF India Ltd. - 2009 (239) ELT 385 (S.C.) squarely .....

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f 2007) that was relied upon by the Tribunal for dismissing the Revenues appeal took the view that there would be no application of Section 11A (2B) or Section 11AB where differential duty was paid by the assessee as soon as it came to learn about the upward revision of prices of goods sold earlier. In M/s. Rucha Engineering the High Court observed as follows: It is evident that the Section (11AB) comes into play if the duty paid/levied is short. Both, the Commissioner (Appeals) and the CESTAT .....

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nd 11A (2B) were not applicable as the situation occurred in the instant, case was quite different, Section 11AB (1) was not at all applicable, and therefore, the Assessee was not required to pay interest. 13. It further held that a case of this nature would not fall in the category where duty of excise was not paid or short-paid. 14. We are unable to subscribe to the view taken by the High Court. It is to be noted that: the assessee was able to demand from its customers the balance of the highe .....

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