2014 (3) TMI 591 - AT - Central Excise

Penalty under Rule 25(1)(a) & (b) of the Central Excise Rules, 2002 read with Section 11AC - Held that - 5 year period for invoking extended period will start from the date of knowledge by the Department. The Revenue came to know about their payment of duty when audit party raised objection. Therefore, the demand is rightly made by invoking extended period - demand of duty is confirmed which is not contested by the Revenue under the provisions of Section 11AC of the Act by invoking extended period. Therefore, ingredients of Section 11AC of the Act are not fulfilled - penalty confirmed - Decided against assessee.

Summary

Issues:
Challenge against imposition of penalty under Rule 25(1)(a) & (b) of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944.

Analysis:
The appellants contested the penalty imposed under Section 11AC of the Central Excise Act, claiming they did not suppress any material fact to evade duty payment. They argued that scrap items were cleared without duty payment, but upon audit party's notification, duty was paid with interest. They highlighted that certain scrap was cleared before the introduction of Rule 3(5)(a), which imposed duty on scrap clearance. The appellants maintained that since duty was paid promptly upon notification, the penalty under Section 11AC was unwarranted. They emphasized that they were not contesting the duty demand, fulfilling Section 11AC requirements and negating the need for penalty.

The Revenue, on the other hand, referred to a Supreme Court decision to support invoking the extended period for demand, starting from the date of the Department's knowledge. They argued that the duty payment was acknowledged only when the audit party raised objections, justifying the extended period for demand. The Tribunal noted that the demand for duty was confirmed and uncontested under Section 11AC, with both parties in agreement. Consequently, the Tribunal found no merit in the Revenue's argument, concluding that the conditions of Section 11AC were not met. Therefore, the impugned order imposing the penalty was upheld, and the appeal was dismissed.