2018 (10) TMI 531 - AT - Central Excise

Relief from Interest and penalties - method of Valuation - it was contended that the central excise authorities were inconsistent in adopting different practices for determination of the differential amounts to be paid despite which they had been complying - appellant has not been laggard in discharging the duty liability and, despite the demonstrated inconsistency in the approach of central excise authorities on the computation method, further duty liability had also been deposited along with a substantial portion of the interest. Held that - The appellant was discharging duty liability in accordance with the adhoc procedure notified for computation of assessable value on goods cleared for captive consumption. The scheme itself envisages reliance upon the data of the previous year for discharge of provisional duty and which, upon availability of data of the current year, is adjusted for payment of the differential duty. Thereby, the legal provisions acknowledge the existence of a differential duty within the framework of law. Furthermore, the contention of the appellant that this scheme of payment of duty should be deemed to be provisional does not appears to be unattractive. The Tribunal, in a similar dispute relating to the same appellant, had upheld the decision of the lower authorities to demand interest and we find no reason to take a contrary view. Interest liability upheld - penalty set aside - appeal allowed in part.

Summary

Issues involved:
Recovery of duty, interest, and penalties imposed on the appellant for differential duty amounts for specific periods; Contention regarding erroneous duty recovery and interest payment methodology; Imposition of penalties under section 11AC of Central Excise Act, 1944; Applicability of penalty provisions and legal precedents; Assessment of duty liability under adhoc procedure for goods cleared for captive consumption; Provisional nature of duty payment scheme; Discharge of duty liability despite inconsistent approaches by central excise authorities; Upholding of interest liability; Setting aside of penalties imposed in the impugned order.

Analysis:

1. Recovery of duty, interest, and penalties: The judgment addresses the appeal by M/s Crompton Greaves Ltd against the recovery of differential duty, interest, and penalties imposed on them by the Commissioner of Central Excise, Mumbai-III for specific periods. The appellant contests the order, claiming that duty liability was discharged along with interest based on their computation of assessable value. The central issue revolves around the correctness of the duty recovery and interest payment methodology adopted by the appellant.

2. Imposition of penalties under section 11AC: The appellant challenges the imposition of penalties under section 11AC of the Central Excise Act, 1944. The appellant argues that they had been complying with the central excise authorities' practices for determining the amounts to be paid, despite inconsistencies in the approaches adopted. The appellant also highlights instances where penalties were dropped at the appellate level, indicating a lack of uniformity in penalty imposition.

3. Applicability of penalty provisions and legal precedents: The judgment discusses the contentions regarding the mandatory imposition of penalties. The Authorized Representative relies on legal precedents, including decisions by the Hon'ble High Court of Bombay and the Hon'ble Supreme Court, to support the invocation of penal provisions. The argument is centered on the necessity of penalties in cases involving differential duty payments.

4. Assessment under adhoc procedure for captive consumption: The judgment delves into the appellant's discharge of duty liability under the adhoc procedure for goods cleared for captive consumption. It acknowledges the provisional nature of the duty payment scheme and the adjustment of duty based on data availability. The tribunal analyzes the circumstances to characterize the assessment as provisional, despite the absence of conventional securities typically mandated for provisional assessment.

5. Upholding interest liability: The judgment upholds the interest liability determined by the original authority, citing a similar dispute involving the same appellant where interest demand was upheld by the tribunal. The specific finding of the first appellate authority serves as justification for maintaining the interest liability in the present case.

6. Setting aside of penalties: Ultimately, the tribunal sets aside the penalties imposed in the impugned order and modifies the decision accordingly. The judgment concludes by pronouncing the decision on 4th October 2018, providing relief to the appellant in terms of penalty imposition.