2018 (7) TMI 312 - AT - Central Excise

Penalty u/s 11AC - no suppression of facts - more than one SCN on same issue, however, the facts were all disclosed in first SCN - whether the non-mentioning of same facts in subsequent SCN, which were mentioned in first SCN would amount to suppression of facts? - Held that - The principles as laid down in the cases of Nizam Sugar Factory v. Collector of Central Excise, A.P. 2006 (4) TMI 127 - SUPREME COURT OF INDIA is squarely applicable to the facts of the present case, where it was held that When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Since an earlier show cause notice dated 30.09.2013 was issued for the earlier period in respect of the same subject matter, it cannot be said that there was any suppression. As there is no suppression, penalty under section 11AC cannot be imposed. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Assessment of finished products at lower prices leading to short payment of Central Excise duty
- Confirmation of demand by adjudicating authority along with interest and penalty
- Setting aside of penalty by Commissioner (Appeals)
- Appeal by Revenue before the Tribunal
- Applicability of Rule 8 of Central Excise Valuation Rules, 2000
- Allegation of suppression of facts with intent to evade duty
- Comparison with previous cases and relevant legal principles
- Imposition of penalty under section 11AC

Analysis:
The judgment pertains to a case where the respondent, engaged in manufacturing chemicals, was found to have assessed their finished products at lower prices, resulting in short payment of Central Excise duty during stock transfer to another unit. The adjudicating authority confirmed a demand of ?10,75,967 along with interest and imposed a penalty under section 11AC. The Commissioner (Appeals) set aside the penalty, leading to the Revenue's appeal before the Tribunal.

The respondent argued that they paid duties based on available cost data at the time of goods removal, with any shortfalls rectified after obtaining CAS-4 Certificate post the relevant year. They contended that the demand was a result of audit observation rather than willful suppression to evade duty. The Tribunal agreed, citing lack of intent to evade duty in a revenue-neutral scenario and absence of concrete evidence supporting the allegation of suppression.

Referring to previous cases like Nizam Sugar Factory and ECE Industries Ltd., the Tribunal found no suppression due to the earlier show cause notice on the same matter. Consequently, it dismissed the Revenue's appeal, emphasizing that without suppression, penalty under section 11AC could not be imposed. The judgment highlights the importance of factual assessment and adherence to valuation rules in excise duty matters, underscoring the need for concrete evidence to establish allegations of evasion.