2015 (2) TMI 220 - AT - Customs

Low Remission of excise duty by the manufacturer - Imposition of penalty - Held that - It is not the case of Revenue that the appellant colluded with the manufacturer M/s. Ind Synergy Ltd. for under-remittance of Excise Duty by the latter or that the appellant had foreknowledge of such evasion of Duty. Since it is not alleged that the appellant had passed on a credit of Duty in excess what was mentioned in invoices under which it had purchased billets and sold these to M/s. Jai Sidh Yogi Steel Rolling Mills, imposition of penalty on the appellant is illegal. Imposition of penalty without establishing any culpability, cannot be sustained. The order passed by the primary Authority as confirmed by the appellate Commissioner, New Delhi cannot therefore, be sustained. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against the appellate order passed by the Commissioner of Customs (Appeals), New Delhi.
2. Imposition of penalty on the appellant for under-remittance of Excise Duty.
3. Allegations against the manufacturer and other dealers.
4. Legal validity of penalty imposition without establishing culpability.

Analysis:
1. The appeal was filed against the appellate order dated 6-3-2013 passed by the Commissioner of Customs (Appeals), New Delhi. The appellant, a registered dealer, purchased iron billets from a manufacturer and supplier, M/s. Ind Synergy Ltd., and sold them to another manufacturer. The issue arose when it was discovered during an audit that M/s. Ind Synergy Ltd. did not remit the Excise Duty to the full extent mentioned in the invoices. Proceedings were initiated against the appellant and others, resulting in the imposition of a penalty on the appellant, M/s. Gujaral Traders. However, it was noted that there was no allegation of collusion or foreknowledge of the evasion of Duty by the appellant.

2. The key contention was that since there was no evidence of the appellant passing on a credit of Duty in excess of what was mentioned in the invoices, the imposition of a penalty on the appellant was deemed illegal. The judgment highlighted that penalty imposition without establishing culpability cannot be sustained. It was emphasized that the appellant was not involved in any collusion with the manufacturer for under-remittance of Excise Duty, and hence, the penalty imposed on the appellant was considered unjustified.

3. The judgment quashed the impugned order and allowed the appeal without costs. The decision was based on the lack of evidence showing the appellant's involvement in any wrongdoing related to the under-remittance of Excise Duty. The order passed by the primary authority and confirmed by the appellate Commissioner was deemed unsustainable due to the absence of culpability on the part of the appellant. As a result, the penalty imposed on the appellant was considered unjust and was overturned.

4. In conclusion, the judgment disposed of the stay application and allowed the appeal in favor of the appellant, M/s. Gujaral Traders. The legal validity of the penalty imposition was thoroughly analyzed, emphasizing the importance of establishing culpability before penalizing a party. The decision highlighted the necessity of concrete evidence to support penalty imposition in cases involving Excise Duty remittance discrepancies.