2022 (1) TMI 808 - AT - Central Excise

Penalties under section 11AC of Customs Act, 1962 and rule 173Q of Central Excise Rules, 1944 - mandate for inclusion of amortized cost had not been complied with in computing the assessable value for discharge of duty liability - HELD THAT - There is no doubt that the computations leading to the confirmation of demand during the first round of litigation were revised substantially during the second round indicating lack of certainty when proceedings were initiated by the central excise authorities. A higher measure of certainty cannot be expected of an assessee. It is also seen from the records that guidelines on proportionate allocation of costs were covered in circular no. 170/4/96-CX dated 23rd January 1996 of Central Board of Excise Customs whereas the demand pertains to a period prior to that also. Reliance can be placed in the case of UNIFLEX CABLES LTD. VERSUS COMMISSIONER, CENTRAL EXCISE, SURAT-II 2011 (8) TMI 63 - SUPREME COURT where it was held that Penalty not imposable when issue involved is of interpretational nature - the case renders a finding that is equally applicable insofar as the ingredients permitting the extended period in section 11A of Customs Act, 1962 to be invoked; it is settled law that one cannot exist without the other. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of differential duty under section 11A of Central Excise Act, 1944.

Analysis:
The dispute centered around the confirmation of a differential duty amounting to ?3,98,140 under section 11A of the Central Excise Act, 1944. The penalties under section 11AC of the Customs Act, 1962 and rule 173Q of the Central Excise Rules, 1944 were set aside in a previous order-in-appeal. The appellant did not contest the failure to file a Price list under Rule 173C, but argued against the confirmation of the differential duty. The original authority confirmed a duty amount of ?9,67,037, later reduced to ?3,98,140 in de novo proceedings. The appellant's cost accountant's worksheets were accepted to drop a substantial portion of the demand proposed in the show cause notice.

Analysis:
The issue of penalty under section 11AC of the Central Excise Act, 1944 was raised by the appellant, citing a decision of the Hon'ble High Court of Bombay. The appellant argued that the condition for invoking the extended period of limitation is similar to the conditions for imposing penalties. The appellant highlighted that the department failed to provide conclusive evidence of intent to evade payment of duty. The Tribunal emphasized that penalties cannot be imposed when divergent views exist on an interpretational issue, as seen in various case laws cited.

Analysis:
The Tribunal noted the lack of certainty in the computations leading to the confirmation of demand during the litigation, indicating the challenges faced by the assessee. The appellant's failure to submit Price Declarations under Rule 173C was not deemed sufficient to prove intent to evade payment of duty. The Tribunal referenced various case laws to emphasize the need for concrete evidence beyond mere inaction or failure to impose penalties.

Analysis:
The Tribunal concluded that the intention to evade payment of duty was not established, leading to the setting aside of the demand and allowing the appeal. The judgment highlighted the interconnected nature of the ingredients permitting the extended period under section 11A of the Customs Act, 1962 to be invoked, emphasizing that one cannot exist without the other. The decision was pronounced on 19/01/2022, setting aside the demand and penalties.