2017 (11) TMI 233 - AT - Central Excise

Penalty - suppression of facts - Held that - the contentions raised by the Appellant that the Audit Party unearthed undervaluation of finished goods from their own records, cannot be considered as suppression of facts and intent to evade duty, is an incorrect propositions from the appellants, in as much on the issue regarding under-valuation, only the Appellant would know as to what is the correct value that needs to be applied for the discharge of excise liability. Having accepted the fact that during the relevant question, there was under valuation, the claim of the Appellants that equivalent penalty imposed is not in consonance with the law by the Appellant, is not sustainable - appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against imposition of penalty for under-valuation of finished goods removed to own unit.

Analysis:
The appeal was against the imposition of an equivalent amount of penalty under the provisions of section 11 (a) (c) of the Central Excise Act, 1944. The Appellant contested that they had disclosed all particulars in their monthly return and had not suppressed any facts. The First Appellate Authority upheld the penalty, stating that even though the short payment was rectified after being pointed out by audit, the suppression of facts and intent to evade duty were evident. The Authority noted that the audit party had discovered undervaluation of finished goods from the Appellant's records, indicating a conscious effort to evade duty. The Authority found mens rea and wilful suppression, justifying the penalty under Section 11AC. The Appellant's argument that no penalty should be imposed after payment was rejected.

The Judicial Member upheld the First Appellate Authority's decision, agreeing that the penalty was justified. The Member noted that the Appellant's own records revealed the under-valuation, and the audit verification confirmed the suppression of facts. The Member concurred with the Authority's reasoning that the Appellant's actions were deliberate, aiming to evade duty unlawfully. The Member highlighted the importance of mens rea and wilful suppression in invoking penalty under Section 11AC. Consequently, the appeal against the penalty imposition was rejected.

In conclusion, the Tribunal upheld the penalty imposed on the Appellant for under-valuation of finished goods removed to their own unit. The decision was based on the findings of mens rea and wilful suppression, as evidenced by the audit discovery of undervaluation in the Appellant's records. The Tribunal affirmed that the penalty under Section 11AC was justified in such cases, emphasizing the importance of complying with Central Excise Law to prevent evasion of duty. The appeal was dismissed, and the impugned order was upheld.