2018 (2) TMI 72 - AT - Central Excise

Liability of duty - freight element incurred on inter-depot transfer of petroleum products for payment of duty - Rule 7 of Valuation Rules - Held that - withdrawal of warehousing facility has brought new responsibility to the appellants as the place of removal for the excisable goods are to be determined at the time of clearance of goods from the factory. When the goods were not sold from the depot to which they were cleared by the appellants, it would necessarily follow that till the actual place of clearance, the element freight has to be added. Penalty - case of appellant is that the tax is paid immediately on intimation from Revenue - Held that - even in such a situation it is open for the Revenue to examine the existence or otherwise of the elements for imposition of penalty. In the present case, the same has been done. Since the criteria for both, extended period of demand as well as imposition of penalty are one and the same and same demand has been confirmed for extended period, we find a different interpretation cannot be invoked for waiver of penalty. Appeal dismissed - decided against appellant.

Issues:
1. Duty liability on the freight element incurred on inter-depot transfer of petroleum products for payment of duty.
2. Appellant's submission focused on the penalty and whether the case should be closed without proceedings under section 11A(2B) of the Act.
3. Contest on the imposition of penalty by the appellants.
4. Interpretation of provisions of section 11A read with section 11AC regarding the imposition of penalty.
5. Whether the appellants' voluntary payment of differential Central Excise duty before the issue of notice should result in the closure of the case.
6. Examination of whether the elements for imposition of penalty are established and whether the penalty should be waived.

Analysis:

The appeal addressed the duty liability concerning the freight element on inter-depot transfer of petroleum products for duty payment. The dispute arose from the Revenue's view that the appellants did not discharge Central Excise duty correctly on the value of freight involved in transferring goods between depots. The original authority confirmed the differential duty for a 5-year period and imposed a penalty under section 11AC of the Central Excise Act, 1944.

Regarding the penalty issue, the appellants did not contest the case on merits but focused on the penalty. They argued that the voluntary payment of the differential duty before the notice should lead to case closure under section 11A(2B) of the Act. The appellants emphasized that their admission of duty liability should not automatically imply the elements for imposing a penalty under section 11AC.

The contest on the penalty continued with the Authorized Representative arguing against the closure of the case as pleaded by the appellants. He maintained that the demand for an extended period and the payment of differential duty before the notice do not preclude the imposition of a penalty if the necessary elements are present. The Authorized Representative highlighted that the imposition of a penalty was justified based on the examination of facts by the original authority.

The Tribunal carefully examined the impugned order and the relevant legal provisions. It considered the appellants' argument that their voluntary payment of duty should result in case closure. The Tribunal analyzed the elements required for penalty imposition and the appellants' plea of continuing the old practice post withdrawal of warehousing provisions for petroleum products.

The Tribunal found that the appellants' argument of absence of malafide only for penalty should not affect the demand for an extended period. It noted that the criteria for both the extended demand period and penalty imposition were the same. The Tribunal concluded that there was no provision to waive the penalty under section 11AC and that the remaining penalty was waived as per legal provisions. Consequently, the appeal was dismissed, and the impugned order was upheld.

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