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2013 (1) TMI 498 - AT - Central ExcisePenalty u/s 11AC - Non-payment of duty on the price escalation amount received - Supplied sleepers to railways against contract with price escalation clause - The price differential on account of price escalation from back date was received by the appellant in the year 1999 - Neither the duty was paid by the appellant nor the receipt of price differential was intimated to revenue Held that - No, The duty on the price escalation amount become payable only in 1999 when the price escalation amount was received and which was not paid by the appellant at that time. From these facts assessee has suppressed the relevant facts from the departments and, hence, the penal provisions of Section 11AC would be attracted. As decided in case of Rajasthan Spinning & Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA) the same would be equal to the quantum of the duty demand confirmed, as there is no discretion either for the Adjudicating Authority or for the Appellate Authority to impose the lower penalty u/s 11AC. In favour of revenue
Issues:
1. Duty payment on price escalation amount received by the appellant. 2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. 3. Applicability of penalty provisions to clearances made before and after 28-9-1996. Issue 1: Duty payment on price escalation amount received by the appellant The appellant manufactured concrete cement sleepers for railways and supplied them under a contract with a price escalation clause. Despite receiving payment for price escalation bills, they did not pay the excise duty on the escalated amount. The non-payment was discovered during a departmental scrutiny based on intelligence received. The Commissioner confirmed the duty demand, and the Tribunal upheld it, noting that duty became payable when the escalated amount was received by the appellant, leading to the imposition of the duty along with interest. Issue 2: Imposition of penalty under Section 11AC The Commissioner imposed a penalty equal to the duty demand under Section 11AC on the appellant for non-payment of duty on the price escalation amount. The Tribunal, in an appeal, reduced the penalty, but the High Court directed a reconsideration based on Supreme Court judgments. The Tribunal held that the penalty under Section 11AC should be equal to the quantum of the duty demand confirmed, as there is no discretion to reduce it. The penalty was upheld, considering the appellant's suppression of facts and the similarity between the conditions for duty demand and penalty imposition. Issue 3: Applicability of penalty provisions to clearances made before and after 28-9-1996 The appellant argued that penalty under Section 11AC should only apply to clearances made after 28-9-1996, citing Supreme Court judgments on the prospective nature of the section. However, the Tribunal found that in this case, duty became payable in 1999 when the escalated amount was received, and as the duty was not paid at that time, the penalty under Section 11AC was applicable to the entire duty demand confirmed, dismissing the appellant's appeal on this point. In conclusion, the Tribunal upheld the duty demand, interest, and penalty imposed on the appellant for non-payment of excise duty on the price escalation amount received. The penalty under Section 11AC was deemed applicable to the entire duty demand confirmed, emphasizing the lack of discretion to reduce the penalty amount. The Tribunal's decision aligned with the Supreme Court judgments and the conditions for duty demand and penalty imposition.
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