2017 (12) TMI 1301 - AT - Central Excise

Rate of duty - fertilizers - extended period of limitation - Held that - Demand of extended period cannot be avoided as the ignorance of law is not a excuse. The appellant is duty bound to know about their statutory liability. Accordingly, there is suppression of fact on the part of the appellant, therefore demand not only for normal period, but for extended period also clearly payable by the appellant. Penalty - Held that - penalty imposed u/s 11AC is set aside - however, it is fact on record that the appellant even after issuance of SCN of first SCN did not obtain registration, therefore there is clear contravention of the provisions on the part of the appellant. Therefore they are liable to penalty u/r 25. Appeal allowed in part.

Summary

Issues involved:
Demand of duty on fertilizers at the rate of 1%, challenge on time bar, penalty imposed under Section 11AC read with Rule 25 of Central Excise Rules, 2002.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai dealt with the demand of duty on fertilizers at a rate of 1% and the related issues of time bar challenge and penalty imposition. The appellant challenged the demand on the grounds of time bar and the penalty imposed under Section 11AC read with Rule 25 of the Central Excise Rules, 2002. The appellant argued that they were not aware of the levy of 1% duty on fertilizers, but the Revenue contended that ignorance of the law is not an excuse and there was clear suppression of facts, justifying the demand for the extended period and the penalty under Section 11AC.

The Tribunal found that there was no dispute regarding the dutiability of fertilizers at the rate of 1% as per Notification No.1/2011-CE dated 1-3-2011. The appellant's defense of ignorance of the levy of duty on fertilizers was not considered valid for avoiding the invocation of the extended period. The Tribunal upheld the confirmation of the demand for both the normal and extended periods, stating that the appellant was obligated to be aware of their statutory liability. Regarding the penalty under Section 11AC, the Tribunal upheld the penalty in one appeal where the extended period was invoked due to suppression of facts, citing the precedent set by the Hon'ble Supreme Court in the case of Union of India Vs. Dharamendra Textile Processors [2008(231) ELT 3(SC)].

In another appeal where the demand was raised during the normal period and the first show cause notice was issued, the Tribunal ruled that there was no suppression of facts, and therefore, the penalty under Section 11AC could not be imposed. However, the appellant's failure to obtain registration even after the issuance of the first show cause notice led to the imposition of a penalty under Rule 25. The Tribunal dismissed one appeal and partly allowed the other, setting aside the penalty under Section 11AC in one case but upholding the penalty of ?50,000 under Rule 25 due to the contravention of provisions by the appellant.

In conclusion, the judgment upheld the demand for duty on fertilizers at the rate of 1% for both normal and extended periods, imposed penalties as per the circumstances of each appeal, and provided a detailed analysis based on the legal principles and precedents cited during the proceedings.