2022 (8) TMI 1154 - AT - Central Excise

Valuation - adoption of valuation in respect of their finished goods cleared to depot at Gaziabad Branch on the basis of transaction value under Section 4 (1)(a) of the Central Excise Act, 1944 instead of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 as amended - suppression of facts or not - levy of equal amount of penalty imposed under the provisions of Rule 25(1)(d) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 - HELD THAT - In the peculiar facts and circumstances of this case, the plea for vacating the penalty is tenable. The substantive dispute between the Department and the Assessee revolved around the question whether valuation adopted by the assesse on the basis of transaction value under Section 4(1)(a) of the Central Excise Act, 1944 or should have followed the provisions of Rule 7 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000. The penalty provision stands attracted where duty of excise has not been levied or paid or has been short-levied or short-paid by the reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. Thus, the prerequisite being there should be material to establish either fraud, collusion or willful mis-statement or suppression of facts or contraventions of the provisions of the Act or the Rules and all these have been committed with an intent to evade payment of duty. In the show cause notice dated 10-06-2016, except for stating that the assessee has contravened the provisions of the Rules, there is no specific allegation so as to hold the assessee guilty of having committed fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. The authority is bound to record a prima facie finding that there was an intent to evade payment of duty by suppressing the material facts or by making wilful misstatement or by committing fraud or collusion. Thus, in the absence of any such specific allegation in the show cause notice, the authority cannot mechanically impose penalty under Section 11AC of the Act - The provisions of Section 11AC of the Act are attracted in the event of establishing fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. This has not been done in the present case. Tribunal has all along taken a consistent view that when the entire demand along with applicable interest has been paid by the Appellant before issuance of show-cause notice, there was no occasion to issue any show-cause notice - the penalty is set aside - appeal allowed.

Summary

Issues:
1. Valuation of finished goods cleared to depot at Gaziabad Branch under Central Excise Act.
2. Imposition of penalty under Rule 25(1)(d) of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act.
3. Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Issue 1: Valuation of finished goods cleared to depot at Gaziabad Branch under Central Excise Act:
The appellant had transferred finished goods to their depot at Gaziabad Branch after paying Central Excise duty at the factory gate and subsequently selling them from the depot. The audit observed that the appellant valued the goods based on transaction value under Section 4(1)(a) of the Central Excise Act, 1944, instead of Rule 7 of the Central Excise Valuation Rules, 2000. The appellant accepted the default, paid the entire Central Excise duty, and later filed an appeal challenging the penalty imposed.

Issue 2: Imposition of penalty under Rule 25(1)(d) of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act:
The appellant appealed before the Commissioner (Appeals) to set aside the penalty imposed under Rule 25(1)(d) of the Central Excise Rules, 2002, along with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the penalty, leading the appellant to file an appeal before the Tribunal. The Tribunal analyzed the case, focusing on the intent to evade payment of duty and the absence of specific allegations in the show cause notice regarding fraud, collusion, or suppression of facts. The Tribunal referred to relevant case laws and found that the penalty was not justified as the duty had been paid before the issuance of the show cause notice.

Issue 3: Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The appellant filed an application under the Sabka Vishwas Scheme for the final settlement of disputes but was deemed ineligible due to pending litigation and failure to fulfill certain conditions. Despite follow-ups, the appellant did not receive the discharge certificate for full and final settlement of tax dues under the Scheme. The Tribunal, after considering the submissions and legal precedents, set aside the penalty and allowed the appeal with consequential relief.

In conclusion, the Tribunal's judgment focused on the valuation of goods under the Central Excise Act, the imposition of penalty under relevant rules, and the eligibility under the Sabka Vishwas Scheme. The decision highlighted the importance of establishing intent to evade payment of duty for penalty imposition and referenced case laws to support its findings. Ultimately, the penalty was set aside, and the appellant's appeal was allowed.