2017 (9) TMI 1791 - AT - Central Excise

Disposal of the dutiable goods on which duty liability was not discharged - It is the case of the appellant that the goods have been disposed of by the District Magistrate as per Court Order and proceeds were paid to the farmers. Since they have not disposed of the goods, they are not liable to pay the duty - Held that - The issuance of SCN is immaterial in the circumstances as the duty not paid by the Appellants is to be treated as recoverable arrears of revenue and action taken accordingly, because it is an outcome of self-assessment vide the ER-1 returns - In view of this, it is not necessary to go into the contentions of Appellants regarding disposal by District Administration - appeal dismissed - decided against appellant.

Summary

Issues: Non-payment of duty on sugar and molasses, imposition of penalty under Rule 25 of CER

Non-payment of duty on sugar and molasses:
The appeal was against Order-in-Appeal No. 751/2014-C.E., dated 21-11-2014, concerning the period from June 2011 to July 2011. The appellant argued that duty liability was not discharged as the goods were disposed of by the District Magistrate per a Court Order, with proceeds paid to farmers. However, the first appellate authority found that the goods were self-assessed by the appellant based on their ER-1 returns, making the non-payment of duty a default. The authority deemed it as 'recoverable arrears of revenue' and stated that the issuance of show cause notice was unnecessary. The authority rejected the appellant's contentions regarding the disposal by the District Administration and upheld the duty liability, attracting interest automatically.

Imposition of penalty under Rule 25 of CER:
The appellant contended that since the information in their ER-1 returns was not questioned, no mala fide intent could be attributed, and penalty under Rule 25 of CER could not be imposed. However, the authority clarified that mens rea is not essential for imposing penalties in economic crimes. The authority highlighted that the penalty under Rule 25 is not mandatory but can be equivalent to the duty evaded. The authority found the imposition of a penalty of ?70,000 under Rule 25 by the original authority to be just and proper, rejecting the appellant's argument that an option to pay 25% of the penalty within 30 days was incorrect. The appeal was rejected based on these findings, upholding the impugned order.

This detailed judgment by the Appellate Tribunal CESTAT BANGALORE, delivered by Member (J), thoroughly analyzed the issues of non-payment of duty on sugar and molasses and the imposition of penalties under Rule 25 of CER. The decision emphasized the importance of self-assessment through ER-1 returns, clarified the non-essentiality of mens rea for imposing penalties in economic crimes, and justified the penalty imposed under Rule 25. The appeal was ultimately rejected, upholding the original order.