2014 (6) TMI 820 - AT - Central Excise

Duty demand - Penalty - Mis declaration - Suppression of facts - Held that - Even though the learned advocate argued that non-mention of duty is not mis-declaration, I am unable to agree with this view. Mis-declaration is nothing but making a declaration which is not true. In this case, it is clear that the assessee had mentioned that the amount of duty had been paid which, in fact, had not been paid. Therefore, I agree with the view submitted by learned AR that as far as penalty is concerned, in this case, Rule 25 has been correctly invoked. As regards the liability of Rs. 53,768/-, there is no dispute and learned counsel has fairly agreed that they are required to deposit the amount in cash in view of the decision of the High Court. - appellant is liable to pay Rs. 53,768/- with interest. On payment of this amount, the appellant shall be eligible for taking Cenvat credit which has been reversed earlier, into their account. As regards penalty is concerned, taking into submissions made by both sides, I consider, it is in the interest of justice, that the penalty be reduced to Rs. 30,000 - Decided partly in favour of assessee.

Summary

Issues: Duty payment default for specific months, contravention of Rule 8(3A) of Central Excise Rules, 2002, penalty imposition under Rule 25, mis-declaration in ER-1 returns, applicability of Section 11AC, dispute over penalty amount, eligibility for Cenvat credit, reduction of penalty amount.

Analysis:

The judgment addresses the issue of duty payment default by the assessee for specific months, January and March 2009, amounting to Rs. 1,12,615 and Rs. 40,711 respectively, as revealed during the scrutiny of ER-1 returns. It was found that the assessee contravened Rule 8(3A) of the Central Excise Rules, 2002 by not paying the due duties. The defaulted duties were subsequently paid by the assessee along with interest.

Proceedings were initiated resulting in the confirmation of a demand for payment of Rs. 53,768, which was paid using Cenvat credit during the default period. Additionally, a penalty of Rs. 1,00,000 was imposed under Rule 25 of the Central Excise Rules, 2002. The counsel for the appellant cited a decision of the Hon'ble High Court of Gujarat, emphasizing that penalty under Rule 25 cannot be imposed without mis-declaration, suppression of facts, or fraud by the assessee. The appellant, being a small-scale unit, argued that the penalty was disproportionately high compared to the default amount.

The Authorized Representative contended that mis-declaration occurred as the appellant indicated in the ER-1 returns that the duty had been paid when it had not. This mis-declaration invoked the provisions under Section 11AC, making the situation distinct from the High Court's decision regarding penalty imposition. The Tribunal agreed with the Authorized Representative, asserting that mis-declaration involves providing false information, which was evident in this case.

The Tribunal upheld the liability of Rs. 53,768, acknowledging the need for the appellant to deposit this amount in cash. However, considering the arguments from both sides, the penalty was reduced to Rs. 30,000 in the interest of justice. The judgment concluded by stating that upon payment of the liability, the appellant would be eligible to claim the reversed Cenvat credit. The appeal was disposed of based on the above terms, providing a detailed analysis of the duty default, penalty imposition, mis-declaration, and the final decision regarding liability and penalty amount.