2013 (7) TMI 833 - AT - Central Excise

Bogus TR-6 challans On scrutiny of the ER-I Returns in, it was found that though during certain period the appellant had enclosed TR-6 Challans showing payment of duty of Rs. 3,79,500/-, on verification, those challans were found to be bogus, as no duty had been deposited in any bank under those challans Held that - This is a case of fraudulent and deliberate failure to discharge the monthly duty liability for which the penalty would be imposable under Rule 25(1)(d) Section 11AC is attracted, in case of non-levy, short levy, short payment or erroneous refund of duty involving fraud etc. for which duty demand is required to be confirmed under Section 11A(2). In term of Sub-Rule (4) of Rule 8 of Central Excise Rules, 2002, the duty self assessed under Rule 6 ibid along with interest for the period of delay payment can be recovered by the Department from the assessee under Section 11 of the Central Excise Act, 1944 and, thus, no notice under section 11A (1) is required to be issued. Since in the case of default covered by Rule 8(3) even if involving fraud, neither any Show Cause Notice under section 11A (1) is required to be issued, nor any order under section 11A(2) is required to be passed, the provisions of Section 11AC and its provisos would not be attracted Decided against the Assessee. - Demand of duty and penalty confirmed. Penalty under Rule 26 of the Central Excise Rules, 2002 Held that - Director of the appellant company, admitted that he is involved in clearance and sale of excisable goods without discharge of duty liability, penalty has been correctly imposed on him Decided against the Assessee.

Summary

Issues: Allegation of non-payment of duty, imposition of penalty under Central Excise Rules

Analysis:
The judgment revolves around the allegation of non-payment of duty by a company manufacturing steel castings. The company was accused of enclosing bogus TR-6 Challans in their ER-I Returns, falsely claiming duty payment. The company's director admitted to fabricating these challans. The Jurisdictional Assistant Commissioner confirmed the duty demand, interest, and imposed penalties on both the company and the director. The Commissioner (Appeals) upheld this decision, leading to the appeals in question.

The primary issue addressed was the plea for reduction of penalties by the appellant's counsel. The counsel argued for a reduction in the penalty on the company to 25% of the duty demand and the waiver of the penalty on the director. The counsel cited previous tribunal decisions and a judgment of the Delhi High Court in support of this plea.

The defense, represented by the Departmental Representative, contended that the case involved fraudulent actions by the company in evading duty payment. It was argued that given the seriousness of the offense, there was no justification for reducing or waiving the penalties imposed.

The judgment extensively discussed the relevant legal provisions under the Central Excise Rules, particularly Rule 8, which mandates timely duty payment by manufacturers. The failure to pay duty and the submission of fake TR-6 Challans were deemed as clear violations of Rule 8, attracting penalties under Rule 25(1)(d) for intent to evade duty payment.

The judgment emphasized that the actions of the company constituted a deliberate and fraudulent failure to meet duty obligations, justifying the penalties imposed under Rule 25(1)(d). Additionally, it clarified that Section 11AC was applicable in cases involving fraud, necessitating duty demand confirmation under Section 11A(2).

Regarding the penalty imposed on the company's director under Rule 26, it was deemed appropriate due to his involvement in the clearance and sale of goods without discharging duty liabilities.

In conclusion, the judgment found no flaws in the impugned order and dismissed the appeals, affirming the penalties imposed on both the company and its director.