2017 (5) TMI 611 - AT - Central Excise

Penalty u/s 11AC - suppression of fact on the part of the respondent - case of Revenue is that appellant have sold the goods on higher MRP as compared to the MRP considered at the time of the clearance of the goods therefore this was very much known to the respondent - Held that - differential duty escaped from payment only due to revision of MRP in respect of stock lying at branches. The change of MRP is not with malafide intention to evade/avoid payment of duty whereas the same is under a practice prevailing in the case of the consumer goods therefore there is no suppression of facts or malafide intention of the respondent - after paying duty alongwith interest admittedly their case was suppose to be settled u/s 11A(2B) and no SCN should have been issued - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against imposition of penalty under Section 11AC due to alleged suppression of fact by the respondent.

Analysis:
The Revenue filed an appeal seeking imposition of penalty under Section 11AC on the grounds of suppression of fact by the respondent. The Revenue argued that the respondent sold goods at higher MRP compared to the MRP at the time of clearance, resulting in differential duty not being paid. The Asstt. Commissioner representing the Revenue reiterated the grounds of appeal, emphasizing the alleged suppression of fact by the respondent. On the other hand, the respondent contended that the goods were cleared based on the prevailing MRP at the time of clearance, and any price changes were due to market trends. The respondent claimed that the differential duty was a bonafide mistake and was rectified by paying excise duty along with interest before any show cause notice was issued. The Commissioner(Appeals) set aside the penalty under Section 11AC, citing Section 11A(2B) as the respondent had accepted the duty demand and paid it with interest before the notice was issued.

The Tribunal carefully considered the submissions from both sides and found that the differential duty arose due to the revision of MRP for stock at branches, not with the intention to evade duty but as a common practice in consumer goods. The Tribunal noted that the respondent had paid the duty with interest before any show cause notice, which aligned with the provisions of Section 11A(2B). The Commissioner(Appeals) highlighted the respondent's lack of intention to evade duty, as the goods were openly manufactured and cleared with duty paid on the declared MRP. The Tribunal observed that the department did not accuse the respondent of altering prices on packages, and the company's business operations were open to departmental audits. The Tribunal concluded that there was no suppression of facts with malafide intention by the respondent, and the duty paid should be considered settled under Section 11A(2B).

In light of the findings, the Tribunal upheld the Commissioner(Appeals) decision to set aside the penalty under Section 11AC, as the duty and interest were paid before the issuance of a show cause notice. The Tribunal dismissed the Revenue's appeal, affirming that the case was appropriately settled under Section 11A(2B) without the need for a penalty. The judgment was pronounced on 26/4/2017, marking the conclusion of the legal proceedings.