2010 (11) TMI 901 - AT - Central Excise

N/N. 8/2003-C.E., dated 1-3-2003 - denial on the ground that the assessee paid the duty by availing CENVAT credit, they had not maintained records as per Rule 9(5) of the CCR, 2004 and they had failed to pay the amount equivalent to the Cenvat credit availed on inputs lying in stock or in process or contained in the final products as on the date of opting out of the Cenvat credit - extended period of limitation - Held that - The very fact that the department had undertaken detailed verification of the records would show that the appellants did not maintain proper records and also the fact that all the details were not shown in the returns would show that there was suppression of facts on behalf of the appellant. This is so in view of the fact that even during the hearing, no claim was made that all the facts, which were required to be incorporated in the periodical returns filed by the appellant, had been indeed incorporated by them. The learned Advocate fairly admitted that he was not aware as to whether the appellants had given all the information required to be given by them in the returns and the facts incorporated in the statement of facts were contested - extended period has been rightly invoked. Option to the appellant to pay 25% of the duty towards penalty subject to the condition that duty, interest and penalty are deposited within 30 days of the order - Held that - duty and interest have already been deposited and if the appellants deposit 25% of the duty demanded towards penalty within 30 days of the receipt of this order, that will be in full discharge of the penalty imposed u/s 11AC of CEA, 1944 - Failure to deposit this amount within 30 days from the date of receipt of this order will result in enhancement of penalty to the extent of 100% of duty demanded. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Duty liability under Notification No. 8/2003-C.E.
2. Maintenance of records as per Cenvat Credit Rules.
3. Penalty imposition under Section 11AC of the Central Excise Act, 1944.
4. Invocation of the extended period for show cause notice.

Analysis:

Issue 1:
The appellant, engaged in manufacturing textile machinery, faced a show cause notice proposing duty appropriation and penalty under Notification No. 8/2003-C.E. The Original adjudicating authority confirmed duty demand and imposed a penalty, upheld by the Commissioner (Appeals). The appellant challenged this in appeal.

Issue 2:
The appellant admitted liability for reversing Cenvat credit at year-end but contested penalty imposition under Section 11AC citing the R.R. Oomerbhoy Pvt. Ltd. case. However, the Tribunal found the cases incomparable as duty payment precedes show cause notice issuance in R.R. Oomerbhoy Pvt. Ltd., unlike the present case.

Issue 3:
Regarding penalty imposition under Section 11AC, the Tribunal observed that duty determination under Section 11A(2B) was done before the show cause notice, justifying the penalty. The appellant's argument for setting aside the penalty was dismissed.

Issue 4:
The appellant contested the extended period invocation in the show cause notice, citing lack of specific fraud allegations. The Tribunal disagreed, noting the Department's detailed investigation post-audit, indicating non-maintenance of records and suppression of facts. The Tribunal held that the extended period was rightly invoked.

Conclusion:
The Tribunal upheld duty demand and penalty imposition, dismissing the appellant's contentions on duty reversal, penalty under Section 11AC, and extended period invocation. The appellant was given an option to pay 25% of the duty towards penalty within 30 days to avoid penalty enhancement. The judgment was pronounced on 16-11-2010 by the Appellate Tribunal CESTAT Bangalore.