2016 (10) TMI 790 - AT - Central Excise

Imposition of penalty u/s 11AC and Rule 27 of the Act - short payment of duty - suppression of facts - N/N.54/2001 C.Ex.(N.T.) dt. 21.6.2001 - payment of duty by availing the notification even after its discontinuance - Held that - the short payment of duty has been taken place in December 2003 and the due date for filing the return for December 2003 is in January 2004. The show cause notice was issued on 22.12.2004 i.e. well within one year. Since, the show cause notice was issued within one year, proviso to Section 11A is not applicable to the case. Consequently ingredients of the proviso to Section 11A and for invoking the penal provision under Section 11AC are same, penalty under Section 11AC is not imposable, I therefore waive the penalty under Section 11AC of the Central Excise Act, 1944. However, it is apparent on record that the appellant failed to file the return in time. Therefore they are liable for penalty under Rule 27 of the Central Excise Rules 2002. Hence, the penalty of ₹ 5,000/- imposed under Rule 27 is upheld - appeal partly allowed.

Summary

Issues:
Short payment of duty resulting from misunderstanding of Notification No. 54/2001-CE(NT) | Allegation of suppression of facts by not filing monthly returns on time | Imposition of penalties under Section 11AC and Rule 27 of the Central Excise Rules 2002

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner of Central Excise, Mumbai-III. The appellant, engaged in manufacturing Readymade Garments, availed the facility of Notification No. 54/2001-C.Ex.(N.T.) despite its discontinuation from 1.4.2003, leading to a short payment of duty in December 2003. The appellant was alleged to have suppressed this fact by not submitting monthly returns for about a year. The adjudicating authority confirmed the demand and imposed penalties under Section 11AC and Rule 27 of the Central Excise Rules 2002. The appeal before the Commissioner (Appeals) was rejected, prompting the appellant to approach the Tribunal. The Tribunal remanded the matter to the Commissioner (Appeals) for reconsideration of the penalties issue. The Commissioner (Appeals) upheld the penalties, leading to the appellant's current appeal.

During the hearing, the Director of the appellant company contended that they believed they were entitled to the notification even in December 2003, with no intention to evade payment. On the other hand, the Revenue representative reiterated the findings of the impugned order, emphasizing the appellant's failure to file monthly returns as a clear suppression of facts. The Member (Judicial) carefully considered the submissions and noted that the show cause notice was issued within one year of the short payment, making the proviso to Section 11A inapplicable. As the ingredients for invoking the penal provision under Section 11AC were not met, the penalty under Section 11AC was waived. However, the appellant's failure to file returns on time warranted upholding the penalty of Rs. 5,000 under Rule 27 of the Central Excise Rules 2002. Thus, the appeal was partly allowed, with the penalty under Section 11AC waived but the penalty under Rule 27 upheld.

In conclusion, the judgment addressed the issues of short payment of duty due to misunderstanding of a notification, the allegation of suppression of facts through delayed filing of monthly returns, and the imposition of penalties under Section 11AC and Rule 27. The decision provided a detailed analysis of the circumstances, considering the appellant's beliefs, the Revenue's arguments, and the legal provisions governing penalties in excise matters.