2019 (6) TMI 188 - AT - Central Excise

Imposition of penalty u/s 11AC of the Central Excise Act, 1944 - violation of valuation rules - intent to evade present or not - for removal of semi finished goods to the sister units, the appellant did not follow the procedures/guidelines laid down under Section 4(1)(b) of the Act read with Rule 8 of the Valuation Rules, 2000 - HELD THAT - D uring the Financial Years 2008-09 to 2010-11, the appellant had paid duty on higher side initially as compared to CAS-4 certificates prepared after finalization of the accounts. Thus, it is not the case of revenue that the appellant is a wilful defaulter and non-payment of duty within the stipulated time for the disputed period can be owing to the reason of fraud, collusion, wilful mis-statement etc., with intent to evade the Government Revenue. The differential amount was deposited by the appellant much prior to the date of issue of the show cause notice. In context with finalization of CAS-4, the CBEC issued instructions from file F.No. 206/10/2017-CX.6 dated 16.12.2017, clarifying that the certificate of cost data can be prepared based on actual data by 31st of December next year. In this case, since the CAS-4 certificate was prepared based on actual cost data for the period 2011-12 and 2012-13 on 18.12.2012, the said clarification of the CBEC covers the case of the appellant. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The appellant, engaged in manufacturing motor vehicle parts, faced a dispute regarding the imposition of penalty under Section 11AC of the Central Excise Act, 1944, related to the stock transfer of semi-finished goods to sister units without following prescribed procedures.
2. Central Excise officers observed discrepancies during an audit, leading to show cause proceedings and subsequent imposition of duty demand and penalty by the adjudicating authority, which was confirmed by the Commissioner (Appeals).
3. The appellant argued that they rectified the oversight by paying the differential duty and interest upon finalization of revised CAS-4 certificates, emphasizing no intention to undervalue goods, thus contending against the penalty under Section 11AC.
4. The Tribunal analyzed the appellant's past compliance history, noting instances of overpayment in previous years and the timely deposit of the differential amount before the show cause notice was issued, indicating no willful default or intent to evade revenue.
5. Referring to CBEC instructions allowing preparation of cost data certificates based on actual data by a specified deadline, the Tribunal found the appellant's actions aligned with the clarification, further citing a precedent where a penalty was set aside in a similar situation.
6. Consequently, the Tribunal found no merit in upholding the penalty imposed under Section 11AC, leading to the allowance of the appeal in favor of the appellant, thereby setting aside the penalty in question.