2017 (8) TMI 1164 - AT - Central Excise

Valuation - duty paid in excess and duty short paid - Held that - Since the appellant is now convinced with regard to the duty demanded, we hold that the impugned order to that extent does not call for interference. Penalty - Held that - since the appellant has made excess payment in some months, there is no intention to evade payment of duty and therefore, the situation does not warrant imposition of penalty - penalty set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Calculation of duty demand based on consignment basis, excess duty payment, penalty imposition, appeal against duty demand and penalty.

Analysis:
The case involved the appellants, manufacturers of HSD Bars, who cleared their products through consignment agents, cost transfer to depot, and on a conversion basis to outlets. They adopted the market value of goods for discharging duty at the factory gate. Due to dealing with products of different sizes and consignment agents in various states, they faced challenges in ascertaining the highest aggregate value at the time of clearance. This led to mistakes in the calculation, resulting in an excess payment of duty amounting to &8377; 6,44,473. A refund claim was filed for the excess duty paid, while a show-cause notice demanded a differential duty amount of &8377; 6,01,746 for the same period. The original authority confirmed a duty demand of &8377; 1,11,360 and imposed a penalty of &8377; 5,000, which was challenged through an appeal.

The appellant's counsel argued that the department did not provide details on how they arrived at the duty demand of &8377; 1,11,360. It was highlighted that in certain months, the appellants had actually paid excess duty, totaling &8377; 2,20,886, with a short payment of only &8377; 34,815. The appellant contended that they had paid an excess duty of &8377; 1,85,071 in total. Following these arguments, the bench directed the department to clarify the duty demand and requested the appellant to furnish their calculations.

Upon review, it was established that the duty demand calculated by the department on a consignment basis was accurate. The appellant, while accepting the duty demanded, requested the penalty to be set aside. The tribunal, considering the appellant's excess payments in some months and the absence of intent to evade duty payment, decided to set aside the penalty of &8377; 5,000. The impugned order was modified to exclude the penalty imposition, and the appeal was partly allowed on these grounds.

In conclusion, the tribunal upheld the duty demand based on consignment calculations but revoked the penalty due to the appellant's inadvertent excess payments without any intention to evade duty payment.