2017 (2) TMI 437 - AT - Central Excise

Imposition of penalty - clearance of goods under SSI exemption without payment of excise duty even after crossing the SSI exemption limit of ₹ 1/- crore as specified under Notification No.8/2003 dated 1.3.2003 - Held that - reliance placed in the case of RASHTRIYA ISPAT NIGAM LTD. Versus COMMISSIONER OF C. EX., VISAKHAPATNAM 2002 (11) TMI 234 - CEGAT, BANGALORE , where it was held that penalty is not imposable when duty demand is deposited before the issue of show-cause notice - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Original No.20/2006 dated 11.10.2006 passed by the Commissioner of Central Excise, Calicut.
- Allegation of suppression by the respondent leading to excise duty demand.
- Imposition of penalty on the respondent for non-compliance of excise laws.
- Application of judicial pronouncements on penalty imposition.

Analysis:

1. The appeal before the Appellate Tribunal CESTAT Bangalore was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Calicut. The case involved a manufacturer of PSC poles falling under Central Excise Tariff 6807.90 who had removed goods without paying excise duty after exceeding the SSI exemption limit. This led to a verification of records, a show-cause notice, and a demand for excise duty amounting to ?50,03,356.

2. The Revenue contended that excise duty demand was justified due to suppression by the respondent, invoking the extended period under Section 11A. However, the main issue raised in the appeal was the non-imposition of penalty by the Commissioner. The Revenue argued that penalty under Section 11AC should have been imposed alongside the confirmed duty demand.

3. The Commissioner, in the impugned order, refrained from imposing a penalty on the respondent. This decision was based on the respondent's plea that non-compliance was due to a misbelief regarding the party liable for excise duty. The respondent had promptly approached the department upon realizing the legal requirements, deposited an amount covering the duty liability, and requested a waiver of penalty. The Commissioner cited the case law of Rashtriya Ispat Nigam Ltd. vs. Commissioner of Central Excise, Vishakaptnam [2003 (161) ELT 285] and the subsequent confirmation of this principle by the Supreme Court of India to support the decision.

4. The Tribunal upheld the impugned order, emphasizing the judicial precedent that penalty is not imposable if duty demand is deposited before the issuance of a show-cause notice. The Tribunal found no fault in the Commissioner's decision to not impose a penalty, citing the consistency of this principle in various Tribunal and High Court decisions. Consequently, the Revenue's appeal was dismissed.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, legal principles applied, and the final decision rendered by the Appellate Tribunal CESTAT Bangalore.