2015 (5) TMI 334 - AT - Central Excise

Imposition of penalty - Value which was charged by them was lower than the value which is charged by them for the same grade and quality of final products to other customers on the basis of validation of advance licence in their favour - Held that - Show-cause notice dated 13.04.2007 invoking extended period seems to be erroneous, in as much as the invoices and the documents which are produced before us indicate that the appellant was indicating on the invoices that the clearances made by them were in fulfilment of export obligations on invalidating the licence in their favour. Appellant's records were audited by the departmental officers and the valuation of the finished goods was accepted by them as there is no adverse audit report. Appellant had been availing the benefit of ratio laid down by the Tribunal in the case of IFGL Refractories Ltd. which indicated that such reduction of the price to the customers who invalidated the licence cannot be called as additional consideration. Show-cause notice which invokes the extended period and the order-in-original that conforms the demand on the ground that there was a suppression and mis-statement of the facts is unsustainable, as there is nothing on record to indicate that there was suppression or willful mis-statement on the part of the appellant with intention to evade duty. Appellant was taking the benefit of the ratio laid down by the Tribunal in the case of IFGL Refractories Ltd. 2001 (5) TMI 56 - HIGH COURT AT CALCUTTA , should have on his own paid the duty liability for the period from 09.08.2005 to December 2005, when the Hon'ble Apex Court upturned the order of the Tribunal. To that extent we are of the view that the appellant is required to pay the Central Excise duty and interest thereof. - the penalty imposed by the adjudicating authority is unwarranted, therefore, the penalty is set aside. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against order-in-original dated 17.3.2008 demanding differential duty based on under-valuation.
2. Appellant's reliance on Tribunal's judgment in IFGL Refractories Ltd. case.
3. Invocation of extended period for demanding duty.
4. Adjudicating authority's confirmation of demands, interest, and penalty.
5. Discrepancy in differential duty payment post Hon'ble Apex Court's judgment.
6. Consideration of suppression or mis-statement by the appellant.
7. Dispute regarding penalty imposition.

The appeal involved a case where the appellant, engaged in manufacturing excisable goods, charged specific customers a lower value compared to others due to the validation of advance licenses. The Tribunal's judgment in IFGL Refractories Ltd. was initially relied upon by the appellant until the Hon'ble Apex Court overturned it on 09.08.2005. The lower authorities demanded the differential dues, leading to a show-cause notice in 2007 for under-valuation, invoking the extended period, and imposing penalties. The appellant argued that the extended period invocation was unjustified, citing precedents where clearances known to the department were not considered as mis-statement or suppression. The appellant contended that the demand should be set aside due to the incorrect show-cause notice.

The Tribunal analyzed the situation, noting that the appellant received invalidated advance licenses, leading to lower clearances for specific customers. The Tribunal highlighted the reversal of the IFGL Refractories Ltd. case by the Hon'ble Apex Court, emphasizing the need for the appellant to pay the differential duty post the Apex Court's decision. Despite finding the extended period invocation erroneous, the Tribunal acknowledged the appellant's benefit from the earlier Tribunal's ruling. The Tribunal held that while the demand was unsustainable due to lack of suppression or mis-statement, the appellant was liable to pay duty and interest from the Apex Court's judgment date until December 2005.

Regarding penalty imposition, the Tribunal deemed it unwarranted due to the interpretational nature of the issue, leading to the penalty's dismissal. The Tribunal concluded that the appellant should pay the differential duty and interest post the Apex Court's decision, setting aside the penalty. The judgment highlighted the appellant's obligation to comply with the Apex Court's ruling and pay the differential duty accordingly. The Tribunal emphasized the need for the appellant to rectify the duty payment discrepancy post the Apex Court's decision, ultimately disposing of the appeal based on these considerations.