2015 (2) TMI 921 - AT - Central Excise

Clandestine removal of goods - Mandatory penalty under section 11AC - Invocation of extended period of limitation - Held that - It is the admission by the appellant that they have cleared inputs without payment of duty which resulted in shortage of inputs at the time of investigation on 18.3.2010. It is also a fact on record that on 10.4.09 when the investigation was done, that was in relation to the shortage of inputs. In these circumstances, I hold that extended period of limitation is rightly invoked. When there is an admission of removal of inputs without payment of duty and that fact came in the knowledge of Revenue during the course of investigation. Therefore, the extended period of limitation is rightly invoked. Further, I find that appellant has paid only duty and not interest, hence as per the provisions of section 11 AC of the Act, appellants are required to pay penalty equivalent to duty. I also find that appellant has relied upon the decision of Rajasthan High Court in the case of Rituraj Pipes & Plastics Pvt. Ltd. (2008 (8) TMI 878 - RAJASTHAN HIGH COURT). The facts of the said decision are not relevant to the facts of this case as in that case there was shortage of inputs which was found during the course of investigation but in this case apart from the shortage of inputs, it is admission on the part of the appellant that they have cleared the inputs without payment of duty. In these circumstances, I do not find any infirmity in the impugned order - Decided against assessee.

Summary

Issues:
1. Imposition of mandatory penalty under section 11AC of the Act.
2. Invocation of extended period of limitation for issuing show cause notice.
3. Payment of duty but not interest before issuance of show cause notice.
4. Applicability of penalty equivalent to duty under section 11AC of the Act.
5. Comparison with the decision of Rajasthan High Court in a similar case.

Issue 1: Imposition of mandatory penalty under section 11AC of the Act
The appellant appealed against an order confirming the mandatory penalty under section 11AC of the Act. The investigation revealed a shortage of inputs due to the appellant selling rusty inputs in the market without payment of duty. The show cause notice was issued, duty was confirmed, interest was imposed, and penalty equal to the duty involved was also levied. The Commissioner (Appeals) upheld the order, leading to the appellant's appeal.

Issue 2: Invocation of extended period of limitation for issuing show cause notice
The appellant argued against the imposition of penalty, stating that a previous show cause notice had been issued, and the extended period of limitation could not be invoked again. However, the Revenue contended that the extended period was rightly invoked as the appellant admitted to the shortage of inputs and clearance without duty payment. The tribunal found the extended period of limitation to be appropriately invoked based on the appellant's admission.

Issue 3: Payment of duty but not interest before issuance of show cause notice
The appellant had paid only duty, not interest, before the show cause notice was issued. The tribunal held that as per section 11AC of the Act, the appellant was required to pay a penalty equivalent to the duty, considering the failure to pay interest before the notice.

Issue 4: Applicability of penalty equivalent to duty under section 11AC of the Act
The tribunal found that since the appellant admitted to clearing inputs without payment of duty, the penalty equivalent to duty was justified. The tribunal emphasized that the appellant's reliance on a previous court decision was not relevant to the current case, as the circumstances differed.

Issue 5: Comparison with the decision of Rajasthan High Court in a similar case
The tribunal compared the current case with a decision of the Rajasthan High Court but found the facts to be distinct. While the previous case involved a shortage of inputs, the current case involved the admission of clearing inputs without duty payment. The tribunal concluded that there was no error in the impugned order and dismissed the appeals filed by the appellants.

This detailed analysis of the judgment covers the issues involved and provides a comprehensive understanding of the tribunal's decision on each aspect raised by the parties.