2008 (12) TMI 178 - AT - Central Excise

Cenvat Credit Rule 6 The respondents are manufacturers of pumps and valves and they were paying duty equivalent to 8% of the value of the clearances under exemption Notification No.10/97. As per Cenvat Credit Rules, 2004, the appropriate duty to be paid is 10.2% on the assessable value on the clearances made under Notification No.10/97. Proceedings were initiated against the respondents for differential duty held that the non-payment of duty has arisen at the time of budgetary changes. There is no finding in the impugned order that such non-payment was deliberate with an intention to evade Central Excise duty. The respondent had already discharged duty liability along with interest. There is absolutely no justification for imposing equal penalty under Rule 25. The Commissioner (A) has passed a correct order appreciating the peculiar facts and circumstances of the case.

Summary

Issues:
1. Differential duty payment under Cenvat Credit Rules, 2004.
2. Allegations of deliberate misstatement and evasion of duty.
3. Consideration of legal precedents in penalty imposition.
4. Justification of penalty imposition under Rule 25.

Analysis:

Issue 1:
The case involved a dispute regarding the appropriate duty payment by the respondents, who were manufacturers of pumps and valves. While they were paying duty at 8% under an exemption notification, the correct duty as per Cenvat Credit Rules, 2004, was determined to be 10.2% on the assessable value. The Adjudicating Authority initiated proceedings against the respondents for the differential duty, leading to a demand confirmation, along with interest and penalty imposition under Rule 25 of the Central Excise Rules, 2002.

Issue 2:
The Revenue contended that the respondents had contravened the Cenvat Credit Rules, 2004, by not paying the differential amount promptly and only doing so after being prompted by the Range officer. The Adjudicating Authority found evidence of deliberate misstatements and misrepresentations by the respondents, indicating an intention to evade payment. The Authority justified the penal action under Rule 25 based on the established mens rea of the respondents.

Issue 3:
The Revenue challenged the Commissioner (Appeals)'s decision, arguing that the decision failed to consider a relevant legal precedent from the Hon'ble High Court of Punjab and Haryana. The precedent highlighted that the mere deposit of duty after being caught but before the issuance of a Show Cause Notice does not exclude the applicability of penalty provisions. The case law was deemed applicable in the present scenario due to repeated misstatements by the assessee, justifying penal action.

Issue 4:
Upon careful consideration, the Tribunal found that the non-payment of duty was not deliberate with an intent to evade Central Excise duty. The respondents had already paid the duty liability along with interest, and the Commissioner (Appeals) had correctly appreciated the circumstances. The Tribunal upheld the impugned order, rejecting the Revenue's appeal and concluding that there was no justification for revising the penalty imposition.

This detailed analysis of the judgment highlights the key issues, arguments, findings, and legal considerations involved in the case before the Appellate Tribunal CESTAT, Bangalore.