2023 (9) TMI 8 - AT - Central Excise

SSI Exemption - supply of impugned goods to various public sector customers as per their purchase orders - non-inclusion of packaging and forwarding charges separately shown in the invoice, in the assessable value - interest - penalty - suppression of facts - extended period of limitation - HELD THAT - In the SCN, there was no proposal for imposition of penalty under Section 11AC but when the Order-in-Original was passed even the equal penalty under Section 11AC was imposed which is beyond the show cause notice, hence, not sustainable in law. Further, it is found that the show cause notice was issued on 09.11.2010 which was received by the appellant on 16.11.2010 for the period pertaining to 2007-08 by invoking the extended period of limitation without the ingredients present as required under Section 11A(4). Further, it is found that the appellant has regularly been filing the ER-1 returns which was scrutinized by the department and the department never raised the objection regarding the irregularity committed by the appellant. Further, department has not been able to bring on record anything to show that the appellant has suppressed the material fact in order to evade the payment of duty. The entire demand is barred by limitation - the impugned order is set aside - appeal allowed.

Summary

Issues involved: Central Excise duty demand, imposition of penalty under Section 11AC, extended period of limitation invoked.

Summary:
The appeal was directed against the Commissioner (Appeals) order rejecting the appellant's appeal and upholding the Order-in-Original. The appellant, registered as an SSI unit, manufactured conveyor and transmission belting for public sector customers. An audit revealed that packaging and forwarding charges were not included in the assessable value for central excise duty payment, leading to a duty shortfall of Rs. 44,473. Subsequently, a show cause notice was issued demanding Rs. 1,88,597 under Section 11A(2) invoking the extended period of limitation. The original authority confirmed the demand, imposed interest and equal penalty under Section 11AC, which was contested by the appellant.

The appellant argued that the impugned order lacked consideration of their reply, invoked extended limitation period without basis, and imposed penalty without opportunity for defense. The appellant contended regular filing of ER-1 returns without objection, highlighting procedural irregularities and lack of willful suppression of facts. The appellant's submissions were disregarded by the authorities, leading to the appeal.

After hearing both parties, it was observed that the appellant, as an SSI unit, supplied goods as per purchase orders to public sector customers. The duty shortfall arose from not including packaging charges in the assessable value, paid under protest by the appellant. The imposition of penalty under Section 11AC exceeded the show cause notice's scope and lacked sustainability in law. The extended limitation period invoked without requisite ingredients was deemed improper. Citing the requirement of willful suppression for extended period invocation, the judgment favored the appellant, setting aside the impugned order and allowing the appeal with consequential relief, if any, as per law.