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2016 (12) TMI 646 - AT - Central ExciseNon-payment of differential duty which arose during the period from 1.3.2011 to 28.2.2013 on account of increase in duty rates on Tapioca Sago falling under Chapter Heading 1903 0000 - Held that - It is not in dispute that differential duty liability arose on account of increase in duty rates on Tapioca Sago during the period 1.3.2011 to 28.2.2013. It is also not in dispute that in respect of two of the appellants i.e. appellants M/s. Arulmurugan Sago Factory and M/s. Sri Balamurugan Sago Factory (Appellants 2 & 3), entire duty liability along with interest has been discharged before issue of SCN thereon and in respect of appellant No.1 in appeal No.E/40034/2016, almost 98% of such liability has been discharged - This being the case, it would have been most appropriate if the SCNs had not been issued in these cases. Instead, these Appellants perforce have been required to come before this forum for relief. In the circumstances, while there is no two opinion that the differential duty has been discharged by the appellant on being pointed out, along with interest amounts thereon, issue of SCNs for imposition of penalties under Section 11AC is an overkill. Penalty has also been imposed under Rule 27 of the Central Excise Rules, 2002 for not taking registration. When in the first place there was no requirement of issue of SCN itself, penalties will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants. Appeal allowed - decided in favor of assessee.
Issues Involved:
Non-payment of differential duty on "Tapioca Sago" falling under Chapter Heading 1903 0000 during the period from 1.3.2011 to 28.2.2013. Analysis: Issue 1: Differential Duty Payment and SCN Issuance The appeals involved non-payment of differential duty on "Tapioca Sago" due to increased duty rates from 1.3.2011 to 28.2.2013. The appellants in the respective appeals had discharged a significant portion or the entire duty liability along with interest before the issuance of Show Cause Notices (SCNs) by the authorities. The first appellant had discharged almost 98% of the duty liability before the SCN was issued on 22.6.2015. Similarly, the other two appellants had paid the entire duty liability with interest before the SCNs were issued. Issue 2: Legal Provisions and Dispute Resolution Section 11(2B) of the Central Excise Act, 1944 was cited, which allows the person liable for duty to pay the amount based on their own ascertainment before the issuance of a notice. It was noted that the differential duty had been discharged by the appellants upon identification, reducing the need for SCNs. The issuance of SCNs and subsequent imposition of penalties under Section 11AC and Rule 27 of the Central Excise Rules, 2002 were deemed unnecessary and excessive. The penalties were considered unjustified, especially when there was confusion regarding duty rates and eligibility for certain concessions. Issue 3: Tribunal Decision The Tribunal acknowledged that the appellants had fulfilled their differential duty obligations along with interest upon identification of the discrepancy. Considering the circumstances and the provisions of Section 11(2B), the Tribunal allowed all three appeals, granting consequential relief as per the law. The Tribunal deemed the penalties imposed as unwarranted, given the proactive payment of the differential duty by the appellants and the absence of a need for SCNs in the first place. In conclusion, the Tribunal allowed all three appeals related to non-payment of differential duty on "Tapioca Sago," as the appellants had discharged their duty liabilities along with interest before the issuance of SCNs. The Tribunal emphasized the provisions of Section 11(2B) and deemed the penalties imposed as excessive, providing relief to the appellants based on the circumstances of the case.
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