2012 (11) TMI 481 - HC - Central Excise

Penalty u/s 11AC - Assessee reverse the credit on rejected inputs on the basis of sales value instead of credit availed on such inputs under rule 3(5) of CCR AO impose penalty u/s 11AC Held that - Since the assessee continuously, in every statutory monthly return declared the goods and, therefore, the limitation would run from the relevant time and notice could have been issued only within a period of 12 months, therefore, beyond the period of 12 months, no demand could have been raised. Therefore allegation of suppression of facts with intent to evade payment of duty is not sustainable and the demand beyond the normal period of limitation is time barred. Appeal decides in favour of assessee

Summary

Issues:
1. Appeal against deletion of penalty of Rs. 67,42,153.
2. Whether rejected inputs were liable for duty payment.
3. Imposition of penalty for suppression of facts.

Analysis:
1. The appellant contested the order passed by the Custom, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata, which allowed the appeal of M/s. Tinplate Company of India Ltd. against a demand of Rs. 67,42,153 and the corresponding penalty. The primary issue in this appeal was the deletion of the penalty amount.

2. The case revolved around the contention that rejected inputs, namely Pickled & Oiled HR Coils, were not liable for duty payment at par with the cenvat benefit availed by the assessee. The CESTAT found the demand justified, stating that the rejected inputs were not considered a new product as they were not subjected to further manufacturing processes.

3. Regarding the imposition of penalty for suppression of facts, the CESTAT observed that the appellants consistently submitted statutory monthly returns, disclosing the clearance of the impugned goods. The tribunal held that there was no intent to evade payment of duty as the returns were filed on time, and the Revenue was aware of the facts. The CESTAT further noted that the limitation for issuing a notice for demand was 12 months, which had lapsed in this case, rendering the demand beyond the normal period of limitation time-barred.

In conclusion, the High Court upheld the decision of the CESTAT, dismissing the Tax Appeal and confirming the deletion of the penalty. The Court found no merit in the appeal, leading to the dismissal of the Cross Objection as well.