2019 (7) TMI 2033 - AT - Central Excise

Levy of penalty - amount of duty paid before the issuance of SCN and the same was properly reflected in the returns filed by the appellant - no requirement to issue SCN - HELD THAT - There is no dispute about the fact that the entire duty demand along with interest was paid by the appellant and this was done prior to the issuance of show cause notice and this fact had been intimated to the department. In view of this, in terms of the provisions of Section 11A(2B), no show cause notice is required to be issued and hence there was no question of imposing any penalty on the appellant. The impugned order imposing penalty is, therefore, set aside - Appeal allowed.

Summary

Issues:
1. Duty payment on petroleum products under Public Distribution Scheme.
2. Applicability of Notification No.4/2006 for duty exemption.
3. Imposition of penalty for non-payment of duty.

Analysis:

Issue 1: Duty payment on petroleum products under Public Distribution Scheme
The appellant, engaged in manufacturing petroleum products, cleared SKO under the Public Distribution Scheme to its sister concern. The Department observed that the sister concern cleared SKO procured from another refinery under a different scheme, paying Excise Duty at a lower rate. The appellant deposited the full duty amount on the SKO cleared from the other refinery before any show cause notice was issued. The adjudicating authority confirmed the demand and imposed a penalty equivalent to the duty amount. The appellant contended that duty payment was made before the issuance of show cause notice and was reflected in their returns.

Issue 2: Applicability of Notification No.4/2006 for duty exemption
The appellant availed the benefit of Notification No.4/2006 for duty exemption on SKO cleared under the Public Distribution Scheme. The Assistant Manager of the appellant argued that duty payment was made based on the intended use of SKO under the scheme and in compliance with the withdrawal of warehousing provisions for petroleum products. The Revenue, represented by A. C., reiterated the findings of the impugned order.

Issue 3: Imposition of penalty for non-payment of duty
Upon reviewing the submissions and records, the Tribunal noted that the entire duty demand, along with interest, was paid by the appellant before the show cause notice was issued, as per Section 11A(2B) provisions. Consequently, the Tribunal found no grounds for imposing a penalty on the appellant. The impugned order imposing the penalty was set aside, and the appeal by the appellant was allowed with any consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the penalty imposed for duty payment on petroleum products under the Public Distribution Scheme, as the duty had been paid before the issuance of any show cause notice, as per statutory provisions.