2017 (1) TMI 349 - AT - Central Excise

Valuation - selling of goods through depot - Rule 7 of Central Excise Valuation Rules, 2000 - Penalty - Differential duty - Held that - On merit of the case regarding the non-payment of Central Excise duty on correct value, the same has been admitted by the appellant. Such admission has come about only after detailed investigation and record/ evidences unearthed by the department - We find such excuse is not acceptable when the said short payment continued resulting in huge loss to the Government. The short payment of duty has been calculated based on the details of clearances effected from the factory gate to the depots and those effected further from the depot. The quantum of goods sold was arrived at based on the invoices of the appellants. Appeal dismissed - decided against appellant.

Issues:
1. Valuation of goods for Central Excise purpose when sold through depot.
2. Discharge of Central Excise duty on proper transaction value.
3. Imposition of penalties on the main appellant and the Director.
4. Contesting the calculation of differential duty.
5. Denial of opportunity to defend the case.
6. Recalculation of duty liability and waiver of penalty.

Analysis:

1. The main issue in this case revolves around the valuation of goods for Central Excise purposes when sold through a depot. The appellant, engaged in manufacturing M.S. Bar, was found to have not discharged Central Excise duty on the proper transaction value for goods cleared through the depot. The department initiated proceedings against the appellant for the demand and recovery of a differential Central Excise duty not paid. The original authority confirmed a differential duty against the appellant, as excise duty had been paid on a lower value at the time of clearance to the depot, while the goods were sold at a higher value from the depot.

2. The appellant did not dispute their liability to pay Central Excise duty as per the sale value of goods from their depot but contested the quantification of the differential duty. The appellant argued that the lower duty payment was due to employee negligence and not a deliberate contravention of the law. However, the Tribunal found the excuse of negligence unacceptable, as the short payment continued resulting in a significant loss to the Government. The Tribunal upheld the findings of the lower authority regarding the liability of the appellant for penalty.

3. The imposition of penalties on the main appellant and the Director was a contentious issue. The appellant claimed that penalties were unjustified as they did not contravene any provisions of the law, attributing the mistake to employee negligence. However, the Tribunal noted that the appellant failed to respond to the demand notice despite repeated reminders, indicating a lack of diligence on their part. The Tribunal upheld the penalties imposed, considering the manifest failure to discharge the proper Central Excise duty knowingly.

4. The appellant contested the calculation of the differential duty but failed to provide supporting evidence to substantiate their own calculation. The Tribunal noted that the short payment of duty was calculated based on clearances from the factory gate to the depots and further sales from the depot, supported by the appellants' invoices. As the appellant could not establish the correctness of their calculation, the Tribunal found no justification to interfere with the calculation made by the department.

5. The appellant acknowledged not contesting the order on the denial of the opportunity to defend their case but pleaded for a recalculation of duty liability and waiver of penalty. However, the Tribunal, based on the facts and circumstances of the case, declined to interfere with the penalties imposed, as the appellant's failure to discharge the proper Central Excise duty was evident during the investigation.

6. In conclusion, the Tribunal found no merit in the appeals and dismissed them, upholding the findings of the lower authority regarding the liability for differential duty payment, penalties, and the failure to follow proper valuation procedures for Central Excise purposes.

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