2016 (1) TMI 691 - AT - Central Excise

Penalty u/s 11AC - suppression or mis-declaration as alleged by revenue - whether there was intention to evade duty? - Held that - As find that the show-cause notice does not highlight any grounds indicating suppression or mis-declaration. The statement of the Chief Executive Officer of the company also does not indicate any reasons for invoking suppression/mis-declaration. The Chief Executive Officer has stated that it was an error on their part. On the same being pointed out they have paid duty and interest. There was no evidence of any suppression or mis-declaration brought out in the proceedings. In the instant case, the appellant could not have gained monetarily as it is not in dispute that credit was available to the sister unit in respect of the duty paid by the appellant. There is no intention to evade duty apparent in the facts and circumstances of this case. Thus, no penalty can be imposed invoking Section 11AC of the Central Excise Act - Decided in favour of assessee

Summary

Issues:
1. Demand show-cause notice for reversal of CENVAT Credit and short levy of duty.
2. Applicability of penalty under Section 11AC of the Central Excise Act.
3. Interpretation of intention to evade duty in the absence of suppression or mis-declaration.

Analysis:
1. The appellant, engaged in manufacturing motor-vehicle parts, received a demand show-cause notice for two reasons: first, for clearing raw materials with CENVAT Credit and second, for clearing semi-finished materials without proper cost calculation, resulting in short levy of duty. The appellant argued that errors were inadvertent, and they voluntarily paid the differential duty and interest before the notice was issued. The appellant contended that they were entitled to take CENVAT Credit in their sister unit and had reversed the demanded amount with interest before the notice, citing relevant legal precedents.

2. The appellant's counsel argued against the imposition of penalty under Section 11AC of the Central Excise Act, emphasizing the absence of any intention to evade duty. The Assistant Commissioner relied on legal judgments supporting penalty imposition even if duty is paid before the show-cause notice. However, the Tribunal found no evidence of suppression or mis-declaration in the case. The Tribunal noted that the appellant could not have gained monetarily as the sister unit had credit for the duty paid. Citing previous cases, the Tribunal concluded that in a revenue-neutral situation, there is no intention to evade duty, leading to the setting aside of the penalty.

3. The Tribunal's analysis focused on the absence of any indication of suppression or mis-declaration in the show-cause notice or the CEO's statement. Considering the revenue-neutral scenario and the appellant's discharge of duty on parts, components, and accessories, the Tribunal found no intention to evade duty. Relying on judicial pronouncements, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the lack of intention to evade duty in the circumstances of the case.