2014 (12) TMI 231 - AT - Central Excise

Valuation - Challenge to levy of penalty u/s 11AC - Suppression of the actual figures of forwarding charges collected on Ex-mill sales and of the depot handling charges collected, with intent to evade Excise Duty - contravention of provisions of Section 4 - Penalty u/s 11AC - Held that - Show cause notice dated 27-3-2001 alleged suppression of material facts and short remittance of duty with an intent to evade the same. This allegation was the basis for invoking the extended period of limitation, under the proviso to Section 11A(1) of the Act. The proceedings culminated in the primary adjudication order which confirmed levy of the specified quantum of deficit Excise duty. An unsuccessful appeal against the primary order resulted in confirmation of the duty. The appellate Authority recorded clear reasons and conclusions, as to suppression of material facts by the appellant justifying invocation of the extended period. The appeal to this Tribunal is, as earlier recorded by us herein, confined to the validity of penalty imposed under Section 11AC. The appellant did not challenge the order of this Tribunal. Since the ingredients for confirmation of the duty liability, on invoking the extended period of limitation; and for imposing penalty under the provisions of Sections 11A and 11AC, respectively, are in pari materia, in our considered view, the conclusion/finding that the appellant had suppressed material facts while under-remitting the Excise duty, constitutes the generic integer for confirmation of penalty under Section 11AC. None of the decisions presented by the appellant expound a contrary ratio nor is any decision brought to our notice expounding the proposition that where confirmation of the liability to tax/duty is founded on a conclusion as to existence of ingredients which are in pari materia the ingredients for imposition of penalty as well, in a challenge to imposition of penalty alone (and when the confirmation of tax/duty has attained finality), the correctness of finding of suppression etc. on the basis of which the confirmation of tax/duty is recorded, is liable to be reconsidered. no error in the impugned order imposing penalty under Section 11AC of the Act, since the order of the appellate Commissioner confirming levy of Excise duty, on invocation of the extended period of limitation and on the basis of the recorded finding that the appellant had suppressed relevant facts while short remitting duty, has become final - Decided against assessee.

Summary

Issues involved:
1. Imposition of penalty under Section 11AC on the appellant.
2. Validity of imposition of penalty under Section 11AC.
3. Consideration of the validity of invocation of the extended period of limitation for initiating proceedings against the appellant.

Analysis of Judgment:

Issue 1: Imposition of penalty under Section 11AC on the appellant
The appellant, a manufacturer of polyester/viscose yarn, was alleged to have short remitted Central Excise duty during a specific period. The primary order confirmed the duty demand along with interest and penalties, including a penalty under Section 11AC of the Central Excise Act, 1944. The appellate Commissioner upheld the liability to Excise Duty and penalty under Section 11AC, citing the appellant's suppression of material facts as the reason for invoking the extended period of limitation. The appellate Commissioner, however, deleted the penalty imposed on the Chairman but confirmed it for the Deputy Manager. The singular issue for consideration was whether the Authorities erred in imposing the penalty under Section 11AC.

Issue 2: Validity of imposition of penalty under Section 11AC
The Tribunal considered the appellant's contention that all issues, including the validity of the duty liability confirmation, should be open for consideration post the Supreme Court's remand. However, the Tribunal rejected this argument, emphasizing that the appeal was specifically against the penalty under Section 11AC. The Tribunal noted that the conditions for invoking the extended period of limitation and imposing penalty under Section 11AC are the same, and the Supreme Court clarified that penalty under Section 11AC applies when duty evasion is established. The Tribunal concluded that the imposition of penalty was legitimate based on the appellant's conduct and the findings of the Authorities.

Issue 3: Consideration of the validity of invocation of the extended period of limitation
The Tribunal emphasized that the confirmation of duty liability and imposition of penalty are intertwined when the ingredients for both are similar. It held that the finding of suppression of facts justifying the extended period of limitation was the basis for confirming the penalty under Section 11AC. The Tribunal highlighted that the confirmation of duty liability had attained finality, making it unnecessary to revisit the findings supporting the duty confirmation. Therefore, the Tribunal found no error in the order imposing the penalty under Section 11AC, given the finality of the duty confirmation based on suppression of facts.

In conclusion, the appeal was dismissed, and no costs were awarded.