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2017 (12) TMI 221 - AT - Central ExciseValue based exemption - CENVAT credit - Section 11D of Central Excise Act, 1944 - Held that - it is an admitted fact that the duty was paid along with interest before the issue of show-cause notice - the proportionate cevnat credit on stock of inputs, semi finished goods and finished goods amounting to ₹ 96,087/- was also paid after being pointed out by the Department. In view of these facts, I do not find any infirmity in the impugned order. Penalty u/s 11AC - Held that - The imposition of penalty of ₹ 6,99,041/- u/s 11AC of the Act is not legal and proper and the actual duty liability under Section 11A of the Act comes to ₹ 5,70,113/- and not ₹ 6,99,041/- because the amount of ₹ 1,28,928/- was not duty assessed under Section 11A but the amount liable to be collected under Section 11D of the Act. In view of this legal position, I reduce the penalty to the extent of ₹ 5,70,113/- from ₹ 6,99,041/-. Penalty on Managing Director - Held that - As far as penalty on the Managing Director is concerned, since equal penalty has been imposed on the company, therefore I do not think it proper to impose the penalty on the Managing Director as the Department has not brought any material to show that Managing Director was directly responsible for non-payment of duty - penalty set aside. Appeal allowed in part.
Issues involved:
1. Non-payment of duty exceeding exemption limit 2. Failure to reverse cenvat credit 3. Non-remittance of collected Central Excise Duty Analysis: Issue 1: Non-payment of duty exceeding exemption limit The appellant, engaged in manufacturing excisable goods, exceeded the full exemption limit and failed to pay the duty amounting to specific values for the years 2002-03 & 2003-04. The department observed discrepancies in duty payment and issuance of show-cause notice. The appellant argued that the duty was paid before the notice, and discrepancies were unintentional. The Commissioner upheld the demand and imposed penalties under relevant sections. Issue 2: Failure to reverse cenvat credit The appellant did not reverse cenvat credit upon transitioning to full exemption, as required by Rule 11(2) of Cenvat Credit Rules, 2004. The appellant contended that the cenvat credit was subsequently paid upon notification by the Department. The appellant's compliance with cenvat credit rules was a crucial aspect of the case. Issue 3: Non-remittance of collected Central Excise Duty During 2006-07, the appellant collected Central Excise Duty from customers but failed to remit it to the government, violating Section 11D of the Central Excise Act, 1944. The appellant later credited the collected amount to the government account along with interest. The dispute arose regarding the penalty imposed under Section 11AC and the actual duty liability under Section 11A. In the judgment, the Tribunal considered the arguments of both parties and reviewed the evidence. It was acknowledged that the duty was paid before the show-cause notice, and certain discrepancies were rectified promptly. The Tribunal found no legal infirmity in the Commissioner's order but reduced the penalty to align with the actual duty liability. Notably, the penalty on the Managing Director was dropped due to lack of evidence showing direct responsibility for the non-payment of duty. The decision was pronounced on 27/11/2017, partly allowing the appeal and setting aside the penalty on the Managing Director.
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