2014 (5) TMI 831 - HC - Central Excise

Penalty imposed u/s 11AC - Duty demand - suppression/mis-declaration of assessable value of the excisable goods - cylinder maintenance charges - Held that - facts of inclusion of cylinder rental charges, cylinder maintenance charges and Acetone, were not at all disclosed by the appellant in the facts disclosed during the course of their filing of the return in Form RT-12. Not only in the said returns but also later on, when questioned on the basis of the audit undertaken by the audit team of AG Rajasthan, the assessee went on denying the said facts and as observed by the AO, after much persuasion, came with the figures from the books of accounts. The said charges were within special knowledge of the appellant and if two views were possible, as claimed by the appellant, then, at least, it could have disclosed the figures and could have put a note that in view of the view, favourable to the assessee, the said amount is not required to be included and thus no duty is leviable on such amount collected by the appellant. Duty demand has been upheld only on the amounts being collected as Cylinder Maintenance Charges which are the cost of Acetone used for dissolving Acetylene gas and since from the records of the case it is clear that the appellant had suppressed the fact that in case of Acetylene, the bulk of the amount collected as cylinder maintenance charges was the cost of Acetone and therefore, there was no infirmity in imposing of penalty and sustaining the same by the CESTAT. The aforesaid penalty has been levied after analyzing the facts on record and is on the material based on appreciation of the facts on record and in our view, the said cannot be said to be involving a substantial question of law much less a substantial question of law - Decided against assessee.

Summary

Issues:
1. Penalty imposed under section 11AC of the Central Excise Act for short payment of duty.
2. Inclusion of cylinder rental charges, cylinder maintenance charges, and Acetone in assessable value for calculating Central Excise Duty.
3. Justification for imposing penalty under section 11AC based on suppression of facts and intent to evade duty.

Analysis:
1. The case involved an appeal against the penalty imposed under section 11AC of the Central Excise Act for short payment of duty. The appellant, engaged in manufacturing Oxygen Gas and Dissolved Acetylene Gas, was found to have received additional consideration from buyers in the form of maintenance charges, leading to short payment of Central Excise duty amounting to Rs.10,13,699. The audit revealed discrepancies in the assessable value calculation due to non-disclosure of additional charges collected from buyers. The appellant's failure to disclose these facts earlier and misdeclaration of assessable value led to the penalty imposition.

2. The issue of including cylinder rental charges, cylinder maintenance charges, and Acetone in the assessable value for calculating Central Excise Duty was central to the case. The appellant argued that these charges were not liable to be included, citing a bonafide belief. However, the revenue authorities, supported by the judgment in M/s Kota Oxygen (P) Ltd. Vs. Commissioner, held that these charges should be considered in the assessable value. The failure of the appellant to disclose these charges and the deliberate suppression of facts justified the penalty imposition under section 11AC.

3. The justification for imposing the penalty under section 11AC was based on the appellant's suppression of facts and intent to evade duty. The authorities found that the appellant had knowingly collected additional charges but failed to disclose them, even after being questioned during adjudication proceedings. The appellant's denial and non-disclosure of crucial information, despite being aware of the charges collected, supported the imposition of the penalty. The courts upheld the penalty, emphasizing the need to prove intent to evade duty in such cases.

In conclusion, the High Court upheld the penalty imposed under section 11AC, considering the deliberate suppression of facts by the appellant and the inclusion of additional charges in the assessable value for calculating Central Excise Duty. The judgment highlighted the importance of disclosing all relevant information and the consequences of attempting to evade duty through misrepresentation or suppression of facts.