2019 (4) TMI 1346 - HC - Central Excise

Waiver of penalty - revenue neutrality - no suppression of facts - notification dated 27.03.2008 - HELD THAT - The question of total revenue neutrality in terms of the notification No.32/1999-CE dated 08.07.1999 was eclipsed by the notification dated 27.03.2008 where-under duty refund has been reduced. Though the question as to whether notification dated 27.03.2008 will survive or not but as on date, it is in force therefore, on such basis complete revenue neutrality is not available - Complete revenue neutrality is linked with the question of imposition of penalty in the context of the intention of a party to evade duty. It is clear that the duty is chargeable but it is 100% refundable, the question of intention to evade payment of duty pales into insignificance. But where the duty charged is not 100% refundable, then any act of concealment, misstatement or suppression of facts will give rise to the intention to evade payment of duty. The case is remanded back to CESTAT for deciding the appeal afresh - appeal allowed by way of remand.

Summary

Issues:
1. Challenge to order under Section 35G of Central Excise Act, 1944.
2. Imposition of penalty and revenue neutrality.
3. Interpretation of various notifications affecting duty refund.
4. Judicial review of notification dated 27.03.2008.
5. Application of Section 11AC (1)(a) of the Central Excise Act, 1944.

Analysis:
1. The judgment concerns the challenge to an order under Section 35G of the Central Excise Act, 1944, passed by the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal set aside the penalty imposed due to lack of suppression and ordered duty refund to the respondent, citing revenue neutrality concerns.

2. The appellant argued that the Tribunal overlooked the limited revenue neutrality and relevant notifications. They referenced notifications like No.32/1999-CE, No.14/2000-Central Excise, and No.20/2007-Central Excise, emphasizing the duty refund provisions. However, the notification dated 27.03.2008 altered duty refund terms, impacting revenue neutrality.

3. The notification from 2008 faced judicial scrutiny in the High Court of Gauhati, where a batch of writ petitions challenging it was allowed. The matter reached the Supreme Court, which issued an interim direction in 2015, staying the judgment's operation subject to conditions.

4. The judgment highlighted the significance of Section 11AC (1)(a) of the Act, emphasizing the intent to evade duty payment as a basis for penalty imposition. The presence of concealment, misstatement, or suppression of facts becomes crucial when duty refund is not 100%, indicating an intent to evade payment.

5. The Court found that the Tribunal failed to consider the impact of the 2008 notification on revenue neutrality and penalty imposition. Consequently, the Tribunal's decision was deemed unsustainable, leading to remand for fresh consideration. The case was sent back to the Tribunal for a reevaluation, and the appeal was disposed of accordingly.