2016 (6) TMI 268 - AT - Central Excise

Validity of show cause notice - duty along with interest was paid before issuance of SCN - Payment of interest within three months from the date of clearance of the goods - Held that - When there is no suppression of fact on the part of the assessee and the duty along with interest is admittedly paid without contest, the show cause notice should not have been issued. The only exception, is provided that if the duty is not paid by reason of suppression of fact, mis-declaration, fraud, collusion etc. with intent to evade payment of duty, immunity provided under sub-section (2B) is not available to the assessee. In the present case, though the non payment was pointed out by the department but no suppression of fact, mis-declaration, collusion, fraud etc. exist in the case for the reason that M/s. MRBBIPL have issued valid invoice for removal of capital goods. Therefore neither show cause should have been issued nor any charges of the show cause notice should have been confirmed. As per above discussion and the clear legal provision under sub-section (2B) of Section 11A, the confiscation of the goods is not legal and correct. Therefore the impugned order is set aside and appeal is allowed in favour of assessee.

Summary

Issues:
1. Confiscation of capital goods for non-payment of excise duty.
2. Validity of show cause notice and confiscation in the absence of suppression of facts or intent to evade payment of duty.

Issue 1: Confiscation of capital goods for non-payment of excise duty:
The case involved M/s. ITC Ltd. providing machineries to another company for biscuit manufacturing. The capital goods were later dispatched to different entities without excise duty payment, leading to their seizure. Subsequently, the original company paid the duty and interest, but a show cause notice was issued to both companies. The adjudicating authority ordered confiscation of the goods, with an option for redemption on payment of a fine. The appellant argued that since duty was paid promptly after departmental pointing out, Section 11A(2B) of the Central Excise Act should apply, exempting them from confiscation. The appellant contended that there was no intent to evade duty, as evidenced by legitimate invoicing and timely payment upon notification.

Issue 2: Validity of show cause notice and confiscation in the absence of suppression of facts or intent to evade payment of duty:
The appellant maintained that the goods were cleared under valid invoices, and upon departmental notification, the duty was promptly paid. The appellant argued that since there was no malafide intention or suppression of facts, the show cause notice and subsequent confiscation were unwarranted. The Revenue, however, relied on a tribunal decision to assert that even if duty was paid belatedly, goods cleared without initial payment were liable for confiscation. The Member (Judicial) analyzed the situation, emphasizing that under Section 11A(2B), if duty is paid promptly upon notification without intent to evade, confiscation should not occur. The Member concluded that since there was no suppression of facts or malafide intent, the show cause notice was unjustified, and the confiscation of goods was deemed incorrect. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

This detailed analysis showcases the legal intricacies involved in the judgment, highlighting the application of Section 11A(2B) to determine the validity of confiscation in cases of delayed excise duty payment without fraudulent intent.