2016 (2) TMI 634 - AT - Central Excise

Extended period of limitation - duty demand - charge of deliberate evasion of duty has been alleged against the appellant - Held that - The facts of the case in Mehta & Co. (2011 (2) TMI 2 - SUPREME COURT OF INDIA ) are squarely applicable to the facts of this case. In these circumstances, hold that duty is correctly demanded from M/s. Samleshwari Packaging Pvt. Ltd. along with interest and penalty imposed is correct. As contended by the learned Counsel that demand of duty should be calculated as cum duty price which is correct as the appellant has not charged any duty over the above invoices price. Therefore, invoice price should be treated as cum duty price for the quantification of demand of duty and interest and penalty are to be quantified accordingly. The adjudicating authority is directed to re-quantify the duty, interest and penalty accordingly. With regard to the imposition of penalty on M/s. Rohini Polymers, find that penalty under Rule 26 clearly mandates that if the goods are liable for confiscation and in the show cause notice there is no proposal for confiscation of the impugned goods in question, therefore, question of imposition of penalty on M/s. Rohini Polymers does not arise. Therefore, set aside the duty on M/s. Rohini Polymers.

Summary

Issues:
1. Whether the extended period of limitation is rightly invoked in the show cause notice.
2. Whether penalty under Rule 26 could be imposed on M/s. Rohini Polymers in the absence of any proposal for confiscation in the show cause notice.

Analysis:

Issue 1: Extended Period of Limitation
The case involved an appeal against an order demanding duty, interest, and imposing penalties on the appellants due to clandestine removal of goods. The investigation revealed discrepancies in the sale invoices issued by the appellants. The appellants argued that the show cause notice was issued beyond the period of limitation, relying on various court judgments. However, the Adjudicating Authority found that the appellants had admitted the duty liability during the investigation and paid the duty without protest. The Tribunal held that the extended period of limitation was rightly invoked as the activity of clandestine removal was admitted by the appellants, distinguishing the case from precedents cited by the appellants. The Tribunal directed the re-quantification of duty, interest, and penalty based on the cum duty price of the goods.

Issue 2: Imposition of Penalty
Regarding the imposition of penalty on M/s. Rohini Polymers, the Tribunal analyzed Rule 26, which mandates penalty only if goods are liable for confiscation. Since the show cause notice did not propose confiscation of the goods, the Tribunal concluded that there was no basis for imposing a penalty on M/s. Rohini Polymers. Therefore, the penalty on M/s. Rohini Polymers was set aside.

In conclusion, the Tribunal disposed of the appeals, upholding the duty demand on M/s. Samleshwari Packaging Pvt. Ltd. while directing the re-quantification of duty, interest, and penalty. The penalty on M/s. Rohini Polymers was set aside due to the absence of a proposal for confiscation in the show cause notice.