2016 (11) TMI 933 - AT - Central Excise

Stock transfer - short payment of duty - Held that - I agree with the arguments put forward by the learned counsel for the appellant referring to the various dates of payment made as per Annexure Il of the show-cause notice. It is seen that the appellant has made payment of ₹ 4,41,539/- in the month of July and the balance of ₹ 54,25,181/- in the end of the very same month. It has also to be mentioned that the re-transfer of the capital goods took place in the very same month by which the liability to pay duty/reverse the credit availed arose on the appellant. From the records, it is revealed that there has been neither suppression nor delay on the part of the appellant in making the payments. In such circumstances, the imposition of penalty under Section 11AC by alleging fraud, suppression etc. is totally unjustified. In view thereof, I hold that the impugned order imposing penalty is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge against penalty imposed under Section 11AC.

Analysis:
The appellant, a manufacturer of concrete weight coated pipes, transferred used capital goods to related units and availed CENVAT credit. The Department alleged that the duty paid by the appellant was insufficient, leading to a penalty imposition under Section 11AC. The appellant argued that they paid the balance duty promptly in the same month as the re-transfer of capital goods, denying any suppression or delay. The Department contended that the penalty was justified due to alleged suppression of facts by the appellant.

The Tribunal analyzed the dates of payment and the sequence of events. It noted that the appellant paid the initial duty amount in July and the balance shortly after, coinciding with the re-transfer of capital goods. The Tribunal found no suppression or delay in payment by the appellant, concluding that the penalty under Section 11AC was unjustified. Therefore, the Tribunal held that the penalty imposition was unsustainable and allowed the appeal in favor of the appellant, granting consequential reliefs if any.

This judgment highlights the importance of timely payment of duties and the need for a clear correlation between transactions and duty payments to avoid penalties under Section 11AC. It emphasizes the significance of proper documentation and adherence to procedural requirements to prevent unjust penalties based on allegations of fraud or suppression. The decision underscores the Tribunal's role in scrutinizing the facts and circumstances of each case to ensure fair and just outcomes in penalty disputes related to duty payments.