2018 (8) TMI 92 - AT - Central Excise

Penalty u/s 11 AC sub-section (1) (a) of Central Excise Act, 1944 - malafide intent present or not - clearance of semi-finished fibre to group units on payment of duty - Held that - The admitted fact of the present case is that the appellant was clearing its goods after making payment of duty. It is after the Board s Circular dated 13th February, 2003, which came to the notice of the appellant that they prayed vide their own request dated 18th January, 2013, to the Department for the provisional assessment order qua the duty to have been paid by them on their semi-finished fibre as being cleared by them to their group units. It is after the said request that the Department demanded details from the appellants since the year 2008-09 till the year 2012-13 - It is also very much apparent and admitted that prior the impugned show cause notice could have been issued, the appellants deposited the differential duty of ₹ 22,40,011/- for the period w.e.f. 2009-10 to 2012-13 (no clearances in the year 2008-09) alongwith the interest of ₹ 2,84,502/- for the period 2011-12 and 2012-13. It becomes absolutely clear that the facts came to the notice of the Department on the request of the appellant itself and that the appellant was paying duty as per its own calculation. Thus, in essence the conduct of the appellant amounts to offering its activities to assessment. The conduct, therefore is opined bonafide - The reasoning given by the appellant in their defence has also been held logical. The findings to my opinion suffer no infirmity in the given facts and circumstances of the case. Hence the order to that extent is therefore, upheld. Reduced penalty - Held that - The duty has been already paid by the appellant for both these years as well. He is liable to pay interest only if there is any differential amount of duty yet to be paid by the appellant for both these years. There is neither such evidence nor any finding in this respect. The interest for the subsequent years has already stands deposited by the appellant alongwith the differential amount of duty paid - the appellant having no malafide intention to evasion of duty, this is a fit case to not to be covered under the proviso to Section 11AC of Central Excise Act - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under Section 11 AC sub-section (1) (a) of Central Excise Act, 1944
- Request for finalization of provisional assessment without an initial provisional assessment order
- Allegations of suppression of facts and intent to evade payment of duty
- Bonafide conduct of the appellant
- Justification of penalty imposition

Analysis:

The case involves an appeal against the penalty imposed by the Commissioner (Appeals) under Section 11 AC sub-section (1) (a) of the Central Excise Act, 1944. The appellant, engaged in the manufacture of yarn, had cleared semi-finished fibre to group units and requested finalization of provisional assessment without an initial order. The Department issued a show cause notice for recovering Central Excise duty, interest, and penalties. The original adjudicating authority confirmed the demand, which was partly set aside on appeal, reducing the penalty to ?64,381. The appellant filed the present appeal, claiming no suppression of facts but bonafide ignorance.

The appellant argued that the issue arose from their self-disclosed information, indicating no intent to evade duty. They rectified the mistake by paying the deficiency and informing the Department. The appellant emphasized the honest conduct and absence of suppression of facts, urging the penalty's complete removal. The Department countered, alleging intentional short levy and justifying the penalty imposition.

The Tribunal found that the appellant cleared goods after duty payment, later requesting provisional assessment following a Circular. The Department demanded details from 2008-09 to 2012-13, and the appellant voluntarily deposited differential duty and interest. The Tribunal noted the appellant's bonafide conduct, emphasizing the Department's burden to prove suppression of facts. Referring to legal precedents, it held that mere omission without intent to evade duty does not constitute suppression. The Tribunal cited a case where a similar request for classification indicated bonafide belief, warranting no penalty without evidence of suppression.

Regarding the penalty, the Tribunal observed that the appellant had paid duty and interest, with no evidence of outstanding duty. Given the appellant's honest conduct and lack of malafide intent, the Tribunal set aside the penalty, finding it not applicable under the proviso to Section 11AC of the Central Excise Act. The appeal was allowed, and the penalty imposition was overturned.

In conclusion, the Tribunal upheld the order, emphasizing the appellant's bonafide conduct and lack of suppression of facts. It set aside the penalty imposition, considering the appellant's payment of duty and interest without evidence of evasion.