2023 (4) TMI 1069 - AT - Central Excise

Extended period of limitation - determination of value after claiming abatement of 35%, even after the same was revised by Notification dated 24.12.2008 - appellant has pleaded that the error in computing the assessable value was bonafide error for which extended period of limitation cannot be invoked - HELD THAT - In the case of ZENITH COMPUTERS LTD. VERSUS UNION OF INDIA 2003 (12) TMI 62 - HIGH COURT OF JUDICATURE AT BOMBAY , Hon ble Bombay High Court has held that the period of limitation prescribed under the Rule 6 has nothing to do with the contract regarding the export but it essentially refers to the date of actual export and admittedly, the applications were filed beyond the period of sixty days from the date of each of the exports. In the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. PETER MILLER PACKERS 2015 (3) TMI 737 - MADRAS HIGH COURT , Hon ble Madras High Court has held that The element of mens rea is one of the components that will be relevant for the purpose of invoking proviso to Section 11A of the Central Excise Act. In the present case, merely pleading ignorance of law, the assessee cannot wriggle out of the duty liability for the larger period. The Tribunal has been kind enough to remand the matter for de novo adjudication on a claim of Modvat credit and that has been allowed. However, the fact remains that duty liability has to be worked out for the larger period if the ingredients of Section 11A has been made out. In view of the above decisions of Hon ble Bombay High Court and of Hon ble Madras High Court, we do not find any merits in this appeal. Appeal dismissed.

Summary

Issues Involved:
1. Applicability of the extended period of limitation for demand.
2. Justification for the imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Summary:

1. Applicability of the Extended Period of Limitation for Demand:
The appellant, engaged in manufacturing paints and varnishes, continued to clear goods with a 35% abatement from the MRP even after the abatement was revised to 30% by Notification No. 49/2008 (NT) dated 24.02.2008. During an audit, it was found that the appellant had not adjusted the abatement rate, resulting in a demand for differential duty for the period from April 2010 to April 2011. The appellant argued that this was a bona fide error and that the extended period of limitation should not apply. However, the Commissioner (Appeals) and the adjudicating authority found that the appellant failed to mention the relevant notification in their ERI returns, constituting suppression of facts. The adjudicating authority emphasized that the appellant, being responsible for the correct assessment of duty, deliberately masked the notification details, justifying the invocation of the extended period under Section 11A(5) of the Central Excise Act, 1944.

2. Justification for the Imposition of Penalty under Section 11AC:
The appellant contended that the penalty under Section 11AC was not justified due to the bona fide nature of the error. However, the adjudicating authority and the Commissioner (Appeals) held that ignorance of law is no excuse and that the appellant's actions demonstrated a deliberate intent to evade duty. Citing precedents from the Hon'ble Bombay High Court and the Hon'ble Madras High Court, the Tribunal concluded that the extended period of limitation and the penalty under Section 11AC were rightly invoked. The Tribunal referenced the case of Zenith Computers Ltd. and Peter & Miller Packers, where it was established that ignorance of law does not absolve the duty liability and that deliberate suppression of facts warrants the imposition of penalties.

Conclusion:
The Tribunal dismissed the appeal, upholding the demand for differential duty, interest, and the penalty imposed under Section 11AC of the Central Excise Act, 1944, due to the appellant's failure to disclose the correct abatement notification and deliberate suppression of facts. The order was pronounced in the open court on 11.04.2023.