2018 (10) TMI 209 - AT - Central Excise

Penalty - case of appellant is that penalty equivalent to the differential duty cannot be imposed as they have discharged duty on the goods cleared from the factory to the depot - extended period of limitation - Held that - As far as confirmation of demands invoking extended period of limitation are concerned, both the authorities below are right in their approach inasmuch as the fact of sale of the excisable goods at a higher price from the depots was not communicated to the department nor the related data was submitted to the department from time to time along with their liability to discharge the differential duty - penalty imposed under Section 11AC of the Central Excise Act, 1944 is upheld - however, the appellants are eligible to discharge 25% of the penalty on such amount, on fulfillment of the conditions laid down under the said provisions. In case of demand confirmed against notices issued periodically for normal period, we are of the opinion that a consolidated penalty of ₹ 1.00 lakh would meet the ends of justice. Appeal allowed in part.

Summary

Issues:
- Dispute over differential excise duty payment for goods transferred to depots and sold at a higher price
- Imposition of penalty equivalent to the differential duty
- Application of Rule 7 of the Central Excise Valuation Rules, 2000
- Extended period of limitation for demands from 2004-05 to December 2007

Analysis:
The appeals were filed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai-I, regarding the differential excise duty payment for goods transferred to depots and sold at a higher price. The appellants manufactured fire extinguishers and parts thereof, selling them directly from the factory and also transferring some to depots. The dispute arose when the assessable value of goods cleared to depots was not determined correctly, leading to demand notices for differential duty from 2004-05 to December 2008. The Commissioner (Appeals) confirmed the demands with interest and penalty, prompting the appeals.

The appellant's representative argued that while they acknowledged the liability for the differential duty due to incorrect assessable value determination, they contested the penalty imposition. They claimed there was no suppression of facts and challenged the penalty equal to the differential duty amount. The Revenue's representative supported the Commissioner's findings, emphasizing the application of Rule 7 of the Central Excise Valuation Rules, 2000. The Revenue argued that penalties were justified due to delayed submission of data and continued lower value discharge despite departmental directions.

After hearing both sides and reviewing the records, the Tribunal noted that duty should have been paid based on Rule 7 when goods were transferred to depots. The Tribunal upheld penalties equivalent to the differential duty for demands under extended limitation periods for 2004-05 and December 2007. However, the appellants were allowed to pay 25% of the penalty amount under Section 11AC of the Central Excise Act, 1944, subject to specified conditions. For demands confirmed against periodic notices for the normal period, a consolidated penalty of ?1.00 lakh was deemed appropriate. The impugned order was modified accordingly, partially allowing the appeals.

In conclusion, the Tribunal upheld penalties for demands under extended limitation periods but provided a partial relief by allowing a reduced penalty payment. For demands confirmed against periodic notices for the normal period, a consolidated penalty amount was set to ensure justice. The appeals were partly allowed based on the modifications mentioned above, thereby disposing of the appeals.