2011 (9) TMI 866 - AT - Central Excise

Duty demand - suppression of facts - misdeclaration with intent to evade duty - Held that - There is no finding as regards the nature of suppression and how provisions of Section 11AC are attracted. The Joint Commissioner in his order-in-original has relied upon the circular issued vide No. 223/57/96-CX., dated 21-6-1996 which laid down the detailed procedure for valuation of the petroleum products - Commissioner (Appeals) has observed that the fact that appellant was not including the same are not brought to the notice of the Department. Further he also relies upon the circular issued by Board No. 354/81/2000-TRU, dated 30-6-2000 to support his contention that in the transaction value any amount which is paid or payable or on behalf of the assessee is to be included but as submitted by the ld. Counsel, there are several decisions relating to the period when Administrative Price Mechanism was followed holding that in view of the Administrative Price Mechanism, the transaction adopted by the Petroleum companies as per the Government directives has to be accepted. This is because in Administrative Price Mechanism the Government determines the transaction value and the margins at different levels with all the relevant issues. Oil marketing companies did not have powers to make alterations. When the price was determined by Government, it would have been unfair to consider other issues - in this case suppression of facts or misdeclaration with intent to evade duty have not been established for imposition of penalty on the assessee - Decided in favour of assessee.

Summary

Issues:
1. Challenge against penalty imposition.
2. Interpretation of Administrative Price Mechanism (APM) discontinuation.
3. Allegations of suppression of facts and intent to evade duty.
4. Application of penalty under Section 11AC of Central Excise Act.
5. Consideration of circulars issued by the Board for valuation of petroleum products.

Analysis:
1. The appellant challenged the penalty imposition while not disputing the duty and interest demand. The Committee allowed the appellant to contest only the penalty aspect based on the absence of mala fide intention to evade duty and no suppression of facts, as noted during the hearing.

2. The appellant argued that despite the discontinuation of the APM, it continued to affect diesel pricing, leading to unintentional non-payment of duty on certain charges. Citing a Supreme Court case, the appellant contended that penalty imposition requires allegations of suppression of facts, which were not proven in this case.

3. The Tribunal observed that the absence of mala fide intention by the appellant, as acknowledged by the Committee, indicated no deliberate evasion of duty. The Tribunal emphasized the need for the Revenue to establish suppression of facts and intent to evade duty for penalty imposition under Section 11AC.

4. The Commissioner upheld the duty payment but imposed a penalty under Section 11AC without specifying the nature of suppression or how the provision applied. The Tribunal highlighted the importance of establishing suppression of facts for duty demands beyond one year and penalty imposition, as per relevant legal provisions and precedents.

5. The Joint Commissioner referenced circulars for valuation of petroleum products, emphasizing the inclusion of certain charges in assessable value. However, the Tribunal noted discrepancies in the enforcement of circulars and the delay in duty demand initiation, indicating a lack of suppression of facts or intent to evade duty by the appellant.

In conclusion, the Tribunal allowed the appeal, considering the absence of established suppression of facts or intent to evade duty, leading to the annulment of the penalty imposition. The duty demand and interest were confirmed as valid, as they were not challenged by the appellant.