2017 (5) TMI 866 - AT - Central Excise

Valuation - provisional assessment not done - appellant should have opted for provisional assessment, however, they have instead valued on ad-hoc by paying maximum of duty on estimated value and they paying differential duty after finalization of valuation - Held that - there was no intention to suppress anything from the Revenue as they have paid the duty and the entire method was known to the Revenue - this method of valuation by the appellant was in full knowledge of the Revenue and there was regular correspondence on this issue - penalty u/s 11AC cannot be imposed - demand of duty upheld - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Incorrect determination of assessable value under Central Excise Act.
2. Demand of duty and penalty under Section 11AC.
3. Applicability of penalty under Section 11AC based on suppression of facts.

Analysis:
1. The case involved the appellant, a chemical company, clearing excisable goods to their other units on a stock transfer basis. A demand notice was issued alleging incorrect determination of assessable value under the Central Excise Act. The appellant paid duty based on provisional cost of production and later paid the differential duty after a cost audit. The dispute arose over the imposition of penalty under Section 11AC. The Commissioner (Appeals) upheld the duty demand but imposed a penalty, citing lack of complete disclosure by the appellant.

2. The appellant did not contest the duty and interest paid but challenged the penalty. The Tribunal noted that the appellant's method of valuation was known to the Revenue, and there was no intention to suppress information. The appellant paid duty based on available data, later adjusting it after cost audit. The Tribunal observed that the appellant should have opted for provisional assessment but had openly communicated their valuation method to the Revenue. Consequently, the Tribunal set aside the penalty under Section 11AC, partially allowing the appeal.

3. The Tribunal's decision was based on the understanding that the appellant's valuation method was transparent and known to the Revenue, with regular communication on the issue. Since there was no intent to conceal information, and the duty was paid in accordance with known procedures, the Tribunal concluded that the penalty under Section 11AC was unwarranted. The Tribunal's ruling highlighted the importance of open communication and compliance with valuation procedures to avoid penalties under excise laws.