2017 (11) TMI 340 - AT - Central Excise

Valuation - goods sold to Holding company - time limitation - whether the aspect of applicability or otherwise of extended period of limitation has been sufficiently dealt with by the lower appellate authority? - Held that - From a plain reading of the provisions of Section 11 AC of the Central Excise Act, 1944, it is clear that mandatory penalty equal to the duty determined is imposable when duty of excise has not been levied or paid put forward by reasons of fraud, collusion or any mis-statement or suppression of facts etc., with intention to evade payment of duty - No doubt, the original authority, while justifying invokation of extended period, has observed that there is suppression on the part of the assesse. But, we are unable to fathom how in spite of such an observation, he has chosen not to impose penalty under Section 11 AC. When the original authority has chosen not to impose penalty under Section 11 AC, impliedly he has also not found any elements of fraud, collusion, suppression or mis-statement in the conduct of the assessee. When no such contumacious conduct is found, there can be no justification for invocation of extended period of limitation provided under Section 11 A (1) ibid - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Applicability of extended period of limitation
2. Imposition of penalties under Section 11 AC of the Central Excise Act, 1944

Analysis:

Issue 1: Applicability of extended period of limitation
The case involved M/s. Henkel India Ltd. (HIL) selling goods to their holding company, M/s. Henkel Spic India Ltd. (HSIL), leading to a demand of duty of ?13,77,632/- along with interest and penalties. The original adjudicating authority held that the longer period of limitation was invokable, but did not impose penalties as proposed. The Commissioner (Appeals) later held that the extended time was not invokable, allowing the assessees to claim a refund. The Tribunal noted that the original authority did not appeal against the findings regarding the invokation of the extended period and the lack of penalties. As no elements of fraud, collusion, suppression, or misstatement were found, the Tribunal rejected the department's appeal, citing the decision in Sakthi Industries Vs. CCE, Chennai - 2009 (240) ELT 302 (Tri. Chen.).

Issue 2: Imposition of penalties under Section 11 AC
The Tribunal highlighted that Section 11 AC of the Central Excise Act, 1944 mandates the imposition of penalties equal to the duty determined in cases of fraud, collusion, suppression of facts, or misstatement to evade duty payment. Despite the original authority's observation of suppression by the assessee, no penalty was imposed under Section 11 AC. The Tribunal emphasized that without challenging this decision and order, the Revenue allowed it to become final. Consequently, the department could not contest the Commissioner (Appeals) decision on suppression. By not finding any contumacious conduct, the Tribunal concluded that there was no justification for invoking the extended period of limitation under Section 11 A (1) of the Act.

In conclusion, the Tribunal found no merit in the department's appeal and rejected it accordingly.