2024 (12) TMI 1298 - HC - Central Excise

Liability of assessee to pay penalty - non-application of mind - violation of principles of natural justice - HELD THAT - The contention of the appellant that the Commissioner had passed order basing on the statements recorded during inspection is not tenable under law on the ground that the Commissioner after verification of the records passed the order. The finding recorded by the Commissioner is not based on the statement recorded during the inspection alone, but is based on other material available on record. In an appeal under Section 35G of the Central Excise Act, 1944, a finding of fact cannot be interfered with unless and until the same is shown to be perverse. The finding recorded by the authorities under the Act can by no stretch of imagination be termed as perverse. The substantial question of law is answered against the assessee in favour revenue - there are no merit in the appeal - appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is: "Whether the finding recorded by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore that the assessee is liable to pay penalty suffers from the vice of non-application of mind and is perverse?"

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The case revolves around the Central Excise Act, 1944, specifically Section 11A, Section 11AC, and Section 11AB, along with the Central Excise Rules, 1944, including Rules 9(1), 52A, 173G, 173F, and 226. The case also involves the interpretation of Notification Nos. 1/93-CE and 38/97-CE.

Court's interpretation and reasoning:

The court examined whether the Appellate Tribunal's decision was based on a misapplication of legal principles or a failure to consider material evidence. The court found that the Appellate Tribunal's decision was supported by a thorough examination of the facts and applicable law.

Key evidence and findings:

The evidence included the inspection reports and records from the Central Excise, Anti-Evasion Wing, which identified irregularities in the appellant's manufacturing and clearance of 15 kg tins without proper duty payment. The court noted that these findings were not solely based on statements made during inspections but were corroborated by other records.

Application of law to facts:

The court applied the provisions of the Central Excise Act and Rules to the facts, confirming that the appellant had evaded excise duties both before and after 28.09.1996. The penalties and interest imposed were found to be consistent with the statutory framework.

Treatment of competing arguments:

The appellant argued that the Commissioner's order was based solely on inspection statements and lacked consideration of their detailed reply. The court dismissed this argument, emphasizing that the Commissioner's decision was based on comprehensive evidence, not just inspection statements.

Conclusions:

The court concluded that the findings of the Commissioner and the Appellate Tribunal were not perverse and were supported by substantial evidence. The appellant's contentions were found to be without merit, leading to the dismissal of the appeal.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"The finding recorded by the Commissioner is not based on the statement recorded during the inspection alone, but is based on other material available on record."

Core principles established:

The judgment reinforces the principle that findings of fact by lower authorities cannot be overturned on appeal unless they are shown to be perverse or unsupported by evidence. It also underscores the proper application of excise duty laws and penalties for evasion.

Final determinations on each issue:

The court determined that the Appellate Tribunal's decision was valid and that the penalties and interest imposed on the appellant were justified. The appeal was dismissed, affirming the lower authorities' decisions.

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