2017 (11) TMI 1453 - AT - Central Excise

Valuation - medicaments sold through consignment agents by the appellant - time limitation - penalty - Held that - though the appellant have suo-moto paid the duty amount for ₹ 4,35,439/- and declared in their RT.12 return but for the past period they have neither paid the duty nor declared to the department. Department was unaware of the differential duty liability for the past period, therefore the appellants have suppressed the facts - extended period rightly invoked. As regard the payment of ₹ 4,35,439/- there is no suppression of fact, however the duty was admittedly paid which is covered by the proviso to Section 11A (2B). Therefore such demand stand maintained. In respect of this amount there is no suppression of fact, the penalty under Section 11AC of ₹ 4,35,439/- is not legal and proper hence the same is set aside. Personal penalty - Held that - since the major amount was paid by the appellant suo-moto and considering the nature of the case, it cannot be said that the appellant. Shri S.N. Narkar has any malafide intention, therefore the aiding and abetting the evasion of duty is not proved against the appellant, hence he is not liable for penalty. Appeal allowed in part.

Summary

Issues:
Demand of Excise Duty on the valuation of medicaments sold through consignment agents - Period of demand from 1st April, 1997 to 28th July 1999 - Amount of duty confirmed under Section 11A with interest under Section 11AB and penalty under Section 11AC - Show cause notice issued on 2nd May 2002.

Analysis:
The main issue in this case was the demand of Excise Duty on the valuation of medicaments sold through consignment agents by the appellant for the period from 1st April, 1997 to 28th July 1999. The amount of duty confirmed was &8377; 8,75,239/- along with interest under Section 11AB and penalty under Section 11AC. The appellant argued that the demand was time-barred as there was no suppression of facts since they had debited a sum of &8377; 4,35,439/- in July 1999 with a clear disclosure in the RT 12 Return. The appellant contended that the differential duty was due to the deduction of commission paid to the assessee, citing conflicting judgments on the matter. Additionally, the appellant argued that the penalty should not be imposed as the amount was paid suo-moto in July 1999 and disclosed to the department without any prompting. The appellant also defended against the personal penalty on an employee, stating that there was no malafide intention. Various judgments were cited in support of these arguments.

The Revenue, represented by the Assistant Commissioner, contended that the appellant had not submitted the mandatory declaration of marketing pattern, indicating a suppression of facts. It was argued that while the appellant had paid duty of &8377; 4,35,439/- suo-moto and declared it in their RT 12 return, this payment was made only in July 1999, whereas the demand was for the period from 1.4.1997 to 28.7.1999. The Revenue asserted that for the earlier period, no duty was paid or declared, leading to a clear suppression of facts.

Upon careful consideration of the submissions, the Tribunal focused on the issues of limitation and penalty. It was noted that while the appellant had voluntarily paid the duty amount of &8377; 4,35,439/- and declared it in their RT 12 return, there was no payment or declaration for the past period, indicating a suppression of facts. The Tribunal acknowledged that there was no suppression of fact regarding the payment made, as it fell under the proviso to Section 11A (2B), thus upholding the demand. However, the penalty under Section 11AC of &8377; 4,35,439/- was deemed not legal and proper and was set aside. Regarding the personal penalty, it was held that there was no evidence of malafide intention on the part of the employee, and therefore, the penalty for aiding and abetting the evasion of duty was not proven. Consequently, the appeal of the appellant was partly allowed, and the appeal of the employee was allowed as well.

In conclusion, the Tribunal's judgment on the limitation and penalty issues favored the appellant, setting aside the penalty and personal penalty due to the absence of malafide intention and the voluntary payment of the duty amount.