2018 (11) TMI 350 - AT - Central Excise

Imposition of penalty - duty demand along with interest has been paid by the appellant much before the issuance of SCN - difference in the assessable value adopted by the appellant when cars were cleared from its factory premises and the final sale price adopted by Renault India Pvt. Ltd. to the dealer - Short payment of service tax - no suppression of facts - Held that - Taking into consideration the fact that the appellants have discharged excess duty during the impugned period and also the fact that the department has quantified the figure on the basis of the exercise undertaken by the appellant themselves for confirming the demand, it is held that the ingredients necessary for imposing penalty under section 11AC is not attracted in the present case. There is nothing to establish that the appellants have suppressed facts with intent to evade payment of duty. The scenario that short-payment of duty had occurred was only because the appellants were arriving the assessable value on the basis of the cars cleared to their Delhi dealers. Penalty set aside - appeal allowed in part.

Issues:
1. Discrepancy in assessable value of cars cleared by the appellant and final sale price adopted by Renault India Pvt. Ltd.
2. Demand for differential duty, interest, and penalties imposed by the original authority.
3. Contesting the penalty imposed by the appellant.
4. Arguments presented by both sides regarding the penalty.
5. Verification of the discrepancy in assessable value by the appellant.
6. Decision on the penalty imposition under section 11AC.

Analysis:
1. The case involved a dispute over the assessable value of cars cleared by the appellant compared to the final sale price adopted by Renault India Pvt. Ltd. This led to a demand for differential duty, interest, and penalties by the authorities.

2. The appellant contested only the penalty imposed, arguing that the duty demand along with interest had been paid before the show cause notice. The discrepancy in value was attributed to a mistake in the method used by the appellant to determine the assessable value. The appellant rectified the error promptly upon departmental notification.

3. The appellant's consultant argued that there was no intention to evade duty, emphasizing the rectification of the error and citing relevant tribunal decisions. The penalty imposition was challenged based on the circumstances surrounding the discrepancy in assessable value.

4. The respondent supported the penalty imposition, contending that the appellant had violated the law by incorrectly determining the assessable value. The respondent argued that the penalty was justified due to the appellant's non-compliance with legal provisions.

5. Upon verification, it was found that the appellant had mistakenly relied on the price of cars cleared to Delhi dealers as the highest price, leading to the discrepancy in assessable value. The appellant promptly rectified the error upon departmental notification and paid the excess duty along with interest.

6. The judge noted that the appellant had rectified the error promptly and had no intent to evade duty. Considering the circumstances and the appellant's actions, the judge concluded that the penalty imposition under section 11AC was unwarranted. The penalty was set aside, maintaining the duty demand and interest. The appeal was partly allowed with consequential relief granted.

This detailed analysis covers the issues raised in the legal judgment, providing an in-depth understanding of the case and the decision rendered by the tribunal.

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