2017 (11) TMI 232 - AT - Central Excise

Penalty u/s 11AC and Rule 26 - SCN has alleged that the duty liability for the period in question was not discharged due to suppression of facts and mis-statement in the form of not informing the revenue authorities about the developmental activities undertaken by the appellant - Held that - the judgment of apex court in the case of UOI vs. Rajasthan Spinning & Weaving Mills 2009 (5) TMI 15 - SUPREME COURT OF INDIA , would apply in the case, where it was held that Once the conditions specified u/s 11AC of the Central Excise Act are satisfied, penalty becomes mandatory and there is no scope of discretionary power. Payment of differential duty, whether before or after the show cause notice is issued, can not alter the liability for penalty - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Penalties imposed under Central Excise Act, 1944 - Discharge of duty liability - Suppression of facts - Mis-statement - Imposition of penalties under appropriate provisions of law.

Analysis:

1. Penalties Imposed under Central Excise Act, 1944:
The appeals were against the Order-in-Appeal dated 30.05.2014, where the penalties imposed by the adjudicating authority and upheld by the first appellate authority were contested. The appellants argued that penalties under section 11AC of the Central Excise Act, 1944 and Rule 26 of Central Excise Rules, 2002 should be set aside. The appellants contended that they discharged the duty liability along with interest voluntarily, and thus, penalties should not be imposed. The main appellant and the individual appellant claimed they were unaware of the duty liability on packaged software. However, the Department argued that penalties were justified despite the duty liability being discharged. The Tribunal noted that the main appellant developed software solutions during the relevant period but did not discharge the duty liability until pointed out by the officers. The issue was whether the penalties imposed were correct under the circumstances.

2. Discharge of Duty Liability and Suppression of Facts:
The main appellant developed software solutions classified as packaged software without paying the duty liability during the relevant period. After being informed by the officers, the duty liability was discharged along with interest. The Department alleged suppression of facts and mis-statement by the appellants for not informing the revenue authorities about their developmental activities. Both lower authorities found suppression of facts and held the appellants liable for penalties. The Tribunal observed that the appellants failed to effectively counter the findings of suppression of facts. The explanation provided by the appellants lacked cogent reasoning, leading to the conclusion that penalties were justified.

3. Imposition of Penalties under Appropriate Provisions of Law:
The Tribunal referred to the judgment of the apex court in a similar case and held that penalties were correctly imposed under the provisions of the law. Citing the case of UOI vs. Rajasthan Spinning & Weaving Mills, the Tribunal found that the penalties imposed were legal and did not warrant interference. The Tribunal upheld the impugned order and rejected the appeals, concluding that the penalties were justified based on the facts and legal provisions.

In conclusion, the Tribunal upheld the penalties imposed under the Central Excise Act, 1944, considering the failure to discharge duty liability, suppression of facts, and the legal provisions governing penalties in such cases. The judgment emphasized the importance of complying with duty obligations and providing accurate information to revenue authorities to avoid penalties under the law.