TMI Blog2017 (6) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of evading full duty liability required to be discharged under law. The acts and omissions of the appellant in this case are very much acts of fraud with intent to evade payment of duty. A continued hiatus of "twenty two" months can in no way explain the conduct of the appellant. Discernably therefore, the appellants knowingly and willfully adopted lesser assessable/transaction value in contravention of Rules 4 & 8 of Central Excise (Valuation) Rules, 2000 read with Rule 8 of Central Excise (Valuation)Rules, 2000. Such undervaluation over a period of one and half years resulting in evasion of duty of ₹ 60,18,344/- calls for levy of penalty. All the provisions of Section 11AC ibid will apply to this case, hence there cannot be any discretion in the imposition of penalty equal to the differential duty determined. Appeal dismissed - decided against appellant. - E/376/2007 - Final Order No. 40920 / 2017 - Dated:- 12-6-2017 - Shri D. N. Panda, Judicial Member And Shri Madhu Mohan Damodhar, Technical Member For the Appellant : Shri G. Natarajan, Advocate For the Respondent : Shri K. Veerabhadra Reddy, JC (AR) ORDER Per Madhu Mohan Damodhar The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,297 was discharged on 18.01.2005 and the other amounts were discharged on 05.02.2005. For convenience of reading, the period with the demand in question as tabulated in page no. 40 of adjudication order is reproduced below: Clearance period Amount paid TR-6 Challan No. Date Apr. 03 Sept. 04 52,56,297 12/04-05, dt-18.01.2005 Feb. 03 Mar. 03 3,55,910 14/04-05, dt-05.02.2005 Oct. 04 Nov. 04 4,06,137 -do- 60,18,344 2.4 On the above factual background appellant says that it had no intention of causing any loss to Revenue. Having discharged the duty element, it is not liable to penalty of ₹ 60,18,344 levied under section 11 AC of the Central Excise Act, 1944. According to the appellant, elements of section 11AC are not present and that too the CAS-4 having coming into force at a later date, there should not be levy of penalty. Ld. Advocate, relies on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined : Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. Of the duty so determined : Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Thus, the intention of the Legislature in introducing Section 11AC was very clear, namely, to provide for a stringent and mandatory penalty for evasion of duties on following circumstances : (1) Applicability : where any duty of excise has not been levied / paid, short levied/short paid/erroneously refunded (2) Qualifying factors : such short payment etc. has arisen by reasons of fraud (or) collusion (or), any willful misstatement (or) suppression of facts (or) contravention of any of the provisions of this Act or the Rules made thereunder, with intent to evade payment of duty (iii) If any of these ingredients are present, the person who is liable to pay duty as determined under sub-section (2) of Section 11A ibid, shall also be liable to pay a penalty equal to the amount of duty so determined. (iv) We do not find any room or liberty under Section 11AC for any discretion in the quantum of penalty. The section has very clearly laid down that when all the aforementioned conditionalities are satisfied, the person who is liable to pay duty as determined shall also be liable to pay penalty equal to the duty so determined. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was liable to be rejected. Admittedly, the matter would not have come to light but for the surprise inspection done by the Enforcement Wing of the respondent Department. If it was a genuine case where the appellant could not remit the differential duty on account of delay in receipt of sale patties, as soon as they have been received they ought to have remitted the differential duty. But that was not done and they intentionally withheld payment of differential duty for the subsequent period which clearly established that there was wilful intention to evade payment of duty. 7.. In the light of the above discussion, the question of law raised by the appellant viz., whether penalty and interest are leviable when duty has been paid before issuance of show cause notice has to be necessarily answered against the appellant in the light of the judgment of the Supreme Court in Union of India v. Rajasthan Spinning Weaving Mills [2009 (238) E.L.T. 3 (S.C.)]. As regards the contumacious conduct of the appellant in wilfully evading payment of duty, we find no reason to interfere with the factual finding recorded by the Appellate Authority and confirmed by the Tribunal. 8.2 The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals, it was contended, relying upon a recent decision of this Court in Union of India v. Dharamendra Textile Processors, 2008 (231) E.L.T. 3 (S.C.) that mere non payment or short payment of duty (without anything else!) would inevitably lead to imposition of penalty equal to the amount by which duty was short paid. In our view the reason assigned by the Tribunal to strike down the levy of penalty against the assessees is as misconceived as the interpretation of Dharamendra Textile is misconstrued by the Revenue. We completely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can alter the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act. 8.5 The ratio propounded in Dharmendra Textile and Rajasthan Spinning Weaving Mills judgements (supra) was relied upon subsequently also by the Apex Court in their following judgements: (1) CCE Mumbai Vs Sunil Silk Mills 2011 (267) ELT 438 (SC) (2) CCE Kolkata Vs Praxair India Pvt. Ltd. 2012 (278) ELT 579 (SC) 8.6 The ratio of Dharmendra Textile Processors (supra) was also followed in a very recent judgement of Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the Tribunal erred in reducing the amount of penalty from ₹ 2,06,000/- to ₹ 50,000/-. Indeed, the Tribunal, in our opinion, failed to take into consideration the law laid down in the case of Dharamendra Textile Processors (supra) which the Tribunal was bound to take while deciding the appeal and instead the Tribunal wrongly placed reliance on its own decision in the case of Escorts JCB Ltd. v. CCE - 2000 (118) E.L.T. 650 (Tribunal). We also find that the Tribunal gave no justifiable legal reasons for reducing the penalty amount. 9.1 To judiciously apply the above interpretation and settled law in respect of Section 11AC ibid, to the matter before us, the following aspects need to be critically examined : (i) Whether the valuation was made in accordance with CAS-4 . (ii) Whether there was undervaluation of the assessable value for not following CAS-4 . (iii) Whether undervaluation was deliberate. (iv) Whether there was deliberate short payment of duty resorting to undervaluation of assessable value . (v) Whether the deliberate undervaluation has resulted prejudice to the interest of Revenue and amounts to a fraud . (vi) Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but a deliberate undervaluation with the intention of evading full duty liability required to be discharged under law. The acts and omissions of the appellant in this case are very much acts of fraud with intent to evade payment of duty. 9.7 The Hon'ble Apex Court in the case of S.P. Chengalvaraya Naidu v. Jaganath- AIR 1994 SC 853 described fraud as : an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage . 9.8 In the case of T.Suryachandra Rao (2005) 6 SCC 149, the Hon'ble Apex Court observed as under : By fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. 9.9 From the above, we are in no doubt that the conduct of the appellants will surely come within the ambit of Frau ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
