2014 (12) TMI 1124 - AT - Central Excise

Waiver of pre deposit - Penalty u/s 11AC - Whether the penalty is imposable on the appellant for the delay in payment of duty - Held that - Appellant did not discharge duty liability for the months of June, 2010 and October, 2010 to April, 2011. However, in the monthly ER-1 Returns, they misdeclared that they had discharged the duty liability. However, the factual position was otherwise. The cheques, which the appellant had deposited towards payment of duty, were dishonoured by the Bank for want of funds in the account and these cheques were also returned to the appellant. The appellant were fully aware about non-payment of the duty. In spite of this knowledge, they did not inform this fact to the department. Further, in the monthly ER-1 Returns, they misdeclared that they had actually discharged the duty liability. This conduct on the part of the appellant is a wilful misstatement of facts with an intent to evade payment of duty. Therefore, the provisions of Section 11AC are clearly attracted. Merely because the appellant discharged the duty liability along with interest prior to the issue of notice, the misconduct on the part of the appellant cannot be obliterated. As per the provisions of Section 11A(6), only on payment of duty, interest and penalty equal to 10% of such duty per month for which the default continued not exceeding 25% of the duty, the balance amount of penalty can be waived. In the present case, even though the appellant had discharged the duty and interest levied, they have not paid any penalty as stipulated in law. Therefore, the question of waiving of penalty would not arise at all. appellant had not made out a case for complete waiver of penalty adjudged against the appellant - Partial stay granted.

Summary

Issues:
- Duty demand confirmation along with interest and penalties under Central Excise Act, 1944.
- Failure to disclose non-payment of duty in monthly returns.
- Imposition of penalties on the appellant and its directors.
- Appeal against penalties imposed.

Analysis:
1. Duty Demand Confirmation and Penalties:
The appeal and stay application were filed against the Order-in-Original confirming a duty demand of Rs. 1,77,55,000 against the appellant firm along with interest and penalties under Section 11AC of the Central Excise Act, 1944. The appellant failed to discharge excise duty liability for specific months due to bounced cheques, resulting in non-disclosure of this fact in their monthly returns. The adjudicating authority imposed penalties on the appellant and its directors for concealing non-payment of duty.

2. Failure to Disclose Non-Payment:
The appellant failed to disclose the non-payment of duty in their monthly ER-1 Returns, instead declaring that they had discharged the duty liability. The cheques issued for duty payment were dishonored by the bank due to insufficient funds, but this information was not shared with the department. The appellant's misdeclaration of duty payment in the returns was considered a wilful misstatement with an intent to evade duty payment.

3. Imposition of Penalties:
The appellant argued that they had no intention to evade duty payment and had subsequently deposited the short-paid duty with interest before the issuance of the show cause notice. However, the Revenue contended that the appellant's conduct of misdeclaring duty payment in the returns revealed guilt, as they did not inform the department about the non-payment voluntarily. The provisions of Section 11AC were deemed applicable due to the intentional misstatements made by the appellant.

4. Appeal Against Penalties:
After considering the submissions from both sides, the Tribunal found that the appellant had not made a case for complete waiver of the penalties imposed. The appellant was directed to make a pre-deposit of 25% of the penalty adjudged within a specified period, failing which the penalties would stand. The recovery of the remaining penalties was stayed during the pendency of the appeals.

In conclusion, the Tribunal upheld the duty demand confirmation and penalties imposed on the appellant and its directors, emphasizing the intentional misdeclaration of duty payment and the subsequent obligation to pay penalties as per the provisions of the Central Excise Act, 1944.