2019 (4) TMI 15 - AT - Central Excise

Penalty u/s 11AC of CEA - duty paid on being pointed out - Held that - There was indeed a case for waiver of SCN under provisions of Section 11A (2B) of the Central Excise Act, 1944 since the duty liabilities were paid up immediately after being pointed out along with interest. Be that as it may be, there also cannot be any accusation that there was suppression of facts or misstatement or fraud or intention to evade payment of duty liability. It is also not disputed that ER-3 returns were being also filed regularly by the appellants. In fact, the demands proposed in both the SCNs have been worked out only on the basis of worksheets and data submitted by the appellant themselves. The ingredients which require mandatory imposition of penalty under Section 11AC ibid are not present in this case - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Duty liabilities, Penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:

The case involved multiple discrepancies identified by the department related to the appellants' manufacturing activities of automobile parts for specific companies. The issues included clearance of cenvat availed inputs without reversing credit, clearance of finished goods without duty payment, failure to amortize the value of received moulds, and improper handling of rejected finished goods. The department issued show-cause notices proposing duty liabilities totaling to significant amounts along with interest and penalties under Section 11AC of the Central Excise Act, 1944. The appellants paid the duty liabilities upon notification. Subsequently, the matter was adjudicated, confirming the demands and penalties, which were then appealed to the Commissioner (Appeals) and further to the Tribunal.

During the hearing, the appellants did not contest the duty liabilities as they had already paid them along with interest. They sought waiver of the penalties imposed under Section 11AC of the Act. The appellants argued that the duty liabilities were promptly settled upon notification by the department, indicating no intention to evade payment. The Tribunal noted that the duty liabilities were paid immediately after being pointed out, without any suppression of facts or intention to evade payment. The appellants regularly filed ER-3 returns, and the demands were based on the appellant's own submissions. Considering these factors, the Tribunal found that the mandatory imposition of penalties under Section 11AC was not warranted in this case. Therefore, the penalties imposed by the original authorities and upheld by the Commissioner (Appeals) were deemed excessive and unjust. Consequently, the Tribunal set aside the penalties under Section 11AC, while upholding the rest of the impugned order. The appeals were partly allowed by setting aside the penalties under Section 11AC of the Central Excise Act, 1944.