2018 (6) TMI 988 - AT - Central Excise

Liability of Interest - Section 11AB of Central Excise Act, 1944 - The duty liability is not in dispute and respondent had discharged that between February 2008 and June 2008 before issue of show cause notice in November 2008 - Held that - Assessee does not deny duty liability and has paid the dues well before issue of notice. They also made it clear that the erstwhile practice had the approval of Joint Director (Cost); a subsequent enlightenment cannot lay blame at the door of the assessee - That revenue neutrality does not accord the right to escape taxes is not in doubt; however, with taxes liability having been discharged, it can certainly support a plea of want of intent to evade. All that occurred is that this neutrality has been cited to demonstrate the indifference to the different modes of assessment. Intent to evade duty is not a fruit of indifference but of active obfuscation. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Setting aside of penalty under section 11AC of Central Excise Act, 1944 on M/s Crompton Greaves Ltd
- Recovery of differential duty under section 11A of Central Excise Act, 1944
- Liability under section 11AB of Central Excise Act, 1944 for interest

Analysis:
1. Setting aside of penalty under section 11AC:
The appeal was against the order setting aside a penalty of ?35,82,504 on M/s Crompton Greaves Ltd under section 11AC of the Central Excise Act, 1944. The original authority confirmed the recovery of the differential duty under section 11A for the period from 2004-05 to 2007-08 along with interest liability under section 11AB.

2. Recovery of differential duty under section 11A:
The duty liability, not in dispute, was discharged by the respondent between February 2008 and June 2008 before the show cause notice in November 2008. The case involved the transfer of goods to a sister unit with duty liability discharge as per rules, but jurisdictional officers alleged short-payment of duty due to non-compliance with valuation rules.

3. Liability under section 11AB for interest:
The impugned order upheld the charging of interest, which was not challenged by the assessee. The dispute revolved around the application of valuation rules and the requirement for provisional assessment, which the respondent did not seek but paid the differential duty promptly upon notification of liability.

4. Judicial Precedents and Arguments:
The Authorized Representative argued that compliance post-notice does not absolve the responsibility for provisional assessment. Legal references were made to tribunal and Supreme Court decisions highlighting the importance of intent to evade duty. The counsel for the respondent cited decisions supporting the contention that lack of intent to evade duty, especially in revenue-neutral scenarios, should impact penalty imposition.

5. Court's Decision:
The tribunal considered the facts and circumstances, emphasizing that intent to evade duty is determined case by case. The assessee's prompt payment upon notification, lack of advantage gained, and approval by a Joint Director were crucial factors. The court found no reason to doubt the respondent's contention and dismissed the appeal, upholding the penalties set aside in the impugned order.

In conclusion, the judgment focused on the intent to evade duty, compliance with valuation rules, and the prompt discharge of duty liability by the assessee. The court emphasized the need to assess each case individually and considered factors such as revenue neutrality, absence of advantage gained, and prior approval by authorities in determining penalty imposition.