2016 (9) TMI 835 - AT - Central Excise

Imposition of penalty - entire duty liability with interest was discharged before issuance of show cause notice - Held that - appellant has paid the differential duty and the interest thereof on 22.7.2002 on their own ascertainment which is not disputed as the adjudicating authority has appropriated the very same amount with interest. In our view, the provisions of Section 11(2B) of the Central Excise Act, 1944 will apply in full force and the lower authority should not have issued any show cause notice to the appellant. Therefore, we, while upholding the duty liability and interest thereof, set aside the penalty imposed by the lower authorities. - Appeal disposed of

Summary

Issues involved: Valuation of goods for duty liability, Imposition of penalty

In this case, the primary issue revolves around the valuation of goods manufactured by the appellant, specifically automobile parts, concerning the consideration of high strength steel received from a supplier for manufacturing. The appellant calculated the assessable value by only including the price of components added by them, labor charges, and profit margin, while excluding the value of the high strength steel. Subsequently, the appellant discharged the duty liability and interest, followed by the issuance of a show cause notice for penalty imposition. The appellant contended that penalty should not be imposed as they had paid the duty liability and interest before the notice was issued, whereas the Revenue argued otherwise, citing a delayed payment in comparison to a sister unit's notice.

Upon examination, the tribunal noted that the appellant had voluntarily paid the differential duty and interest based on their own assessment, which was acknowledged by the adjudicating authority. The tribunal emphasized the application of Section 11(2B) of the Central Excise Act, 1944, stating that no show cause notice should have been issued to the appellant. Consequently, the tribunal upheld the duty liability and interest while overturning the penalty imposed by the lower authorities.

Therefore, the tribunal's decision in this matter upholds the duty liability and interest but sets aside the penalty, ultimately disposing of the appeal in favor of the appellant.