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2019 (6) TMI 5 - AT - Central ExciseClandestine manufacture and removal - PVC pipes - service of order - imposition of penalties - HELD THAT - The discrepancies have not been properly and satisfactorily explained by the appellant. The adjudicating authority has picked up the sale value etc., from the books of the appellant as noted at paragraph-3 of the SCN. But, it is also a fact that upon being pointed out, the appellant admitted duty liability and paid the duty, but interest alone was paid late, on 03.09.2014, which is after the date of the OIO - impugned order upheld. Service of order - HELD THAT - There is a finding that Shri V. Satish appeared before the Superintendent along with duly authorization letter which fact was not denied. Therefore, the contention of the Ld. DR that the order was served as per request on the authorized person is required to be accepted, but the fact remains that the same was never served on the individual who was also saddled with penalty. Penalty u/s 11AC - HELD THAT - There are no allegation as to suppression, fraud, etc. either in the SCN while proposing the penalty or is there any discussion about the same while confirming, in the Order-in-Original. Hence, the above penalty is liable to be set aside - penalty under Section 11AC could be imposed only when the conditions mentioned in Section 11AC exists - there is absolutely nothing on record to suggest any suppression, fraud, etc. for which reason duty of excise was not paid or short paid, etc., and therefore, I have to only assume that the conditions are not satisfied in this case. Penalty under Rule 26 on Shri V. Satish, Incharge - HELD THAT - Though penalty is imposed but the statutory requirements of serving the order on him is not complied with and thus, the said appellant has not been served with the reasons and the order whereby a demand is raised against him. Hence, even though an order imposing penalty remains on paper, in the absence of communication of the same, the order cannot be enforced - order cannot sustain. Appeal allowed in part.
Issues Involved:
1. Validity of the Show Cause Notice (SCN) 2. Demand being time-barred 3. Penalty under Section 11AC of the Central Excise Act 4. Penalty under Rule 26 of the Central Excise Rules, 2002 Issue-wise Detailed Analysis: 1. Validity of the Show Cause Notice (SCN): The appellant contested the validity of the SCN, arguing that since they had paid the entire duty before the issuance of the SCN, no SCN should have been issued. They relied on several case laws, including CCE, Bang-I Vs. Geneva Fine Punch Enclosures Ltd., L. Madanlal Aluminium Ltd. Vs. CCE, Kolkata-II, and RKE Technologies Vs. CCE & ST, Visakhapatnam, to support their argument. However, the adjudicating authority, after considering the allegations and the appellant’s response, found that the discrepancies in the manufacturing and clearing of PVC pipes were not satisfactorily explained. Consequently, the SCN was deemed valid. 2. Demand Being Time-Barred: The appellant argued that the demand was time-barred as the SCN was issued on 30.12.2012, whereas the period of dispute was 2010-11, and the officers visited the premises on 17.02.2012. The statements were recorded on 22.02.2012 and 26.09.2012. However, the adjudicating authority did not find merit in this argument, as the invocation of the larger period of limitation was deemed appropriate given the circumstances. 3. Penalty under Section 11AC of the Central Excise Act: The appellant challenged the imposition of penalty under Section 11AC, arguing that there was no allegation of suppression or intention to evade duty. The adjudicating authority noted that the penalty under Section 11AC could only be imposed if there was an allegation of fraud, suppression, or willful misstatement, which was not present in this case. The authority relied on the Supreme Court’s decision in UOI Vs. Rajasthan Spinning & Weaving Mills, which clarified that penalty under Section 11AC is punishment for deliberate deception with intent to evade duty. Since there was no such finding in the SCN or the Order-in-Original, the penalty under Section 11AC was set aside. 4. Penalty under Rule 26 of the Central Excise Rules, 2002: The penalty imposed on Shri V. Satish, In-charge, under Rule 26 was also contested. The adjudicating authority found that the statutory requirements of serving the order on Shri V. Satish were not complied with. The order was never served on him individually, and the penalty order remained unenforceable due to the lack of proper communication. Consequently, the penalty under Rule 26 was set aside. Conclusion: The appeals were disposed of with the following outcomes: - Appeal No. E/40021/2018 filed by M/s. Agarwal Pipes was partly allowed by setting aside the penalty imposed under Section 11AC of the Act, without disturbing the findings on merit. - Appeal No. E/400007/2018 filed by Shri V. Satish, In-charge, was allowed by setting aside the penalty imposed under Rule 26 of the Central Excise Rules, 2002. (Order pronounced in the open Court on 22.03.2019)
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