2016 (7) TMI 1110 - AT - Central Excise

Demand of duty - (i) to recover duty on MRP based assessment on goods supplied to CSD canteens and Institutions, (ii) to deny CENVAT credit taken before receipt of goods and (iii) to recover Central Excise duty on certain invoices recovered from the appellant on which there were errors. - Held that - In so far as serial number (i) of first para is concerned, we find that the issue of applicability of MRP based assessment to institutional sales has been contentious matter and there have been various judgements on either side. In the instant case no evidence has been adduced to show that the appellants were aware of their liability and had deliberately suppressed from the Revenue. In these circumstances no penalty can be imposed. In so far as the serial number (ii) of first para is concerned, the appellant had reversed the said credit on their own and in the first adjudication order no penalty on this issue was imposed. Since the said order has not been challenged by the Revenue, no penalty can now be imposed on the appellant on this count. In fact the first adjudication order finalized the issue. In so far as serial number (iii) of first para is concerned we find that all the invoices produced by the appellant show that they have invoice numbers printed by computer. In some of the invoices the serial number has also been printed by franking machine and in some others the same has been pre-printed. In all the invoices, whether pre-printed or machine printed there is computer generated identical numbers on the invoices. Furthermore, all the invoices clearly shows the duty has been paid in respect of those invoices. We find that the statements of the Director (Finance & Administration) and the Director (Operations) of the appellant do not contain any admission of clandestine clearance. The show-cause notice does not contain any allegation or evidence of clandestine clearance. In these circumstances, we cannot sustain the charge of clandestine clearance. Decided partly in favor of assessee.

Summary

Issues:
Recovery of duty on MRP based assessment, denial of CENVAT credit, recovery of Central Excise duty on invoices with errors.

Analysis:
1. The appellant, M/s. Kellogg India Pvt. Ltd., received a notice to recover duty on MRP based assessment, deny CENVAT credit, and recover Central Excise duty on certain invoices with errors. The Commissioner confirmed demands on recovery of duty and Central Excise duty but dropped the demand on denial of CENVAT credit. The Tribunal remanded the matter for re-determination of penalties.

2. The appellant argued that they had paid the duty for MRP based assessment. The issue of valuation for goods sold to institutional buyers was a matter of interpretation with different court decisions. The appellant contended that no penalty should be imposed as there was no deliberate suppression of liability.

3. Regarding the denial of CENVAT credit, the appellant claimed they had reversed the amount on their own, and since the first order did not impose a penalty and was unchallenged by the Revenue, no penalty should be imposed now.

4. The appellant presented invoices to address discrepancies in serial numbers, arguing that all invoices had computer-generated serial numbers and clear details of duty paid, with no evidence of clandestine clearance presented by the Revenue. The appellant maintained that there was no clandestine clearance of goods.

5. The Revenue argued for penalties citing duty liability admission, improper credit availment, and different serial numbers on invoices indicating potential clandestine activities. They contended that the appellant had paid duty without reservation, indicating guilt admission.

6. The Tribunal found that the issue of MRP based assessment for institutional sales was contentious, with no evidence of deliberate suppression by the appellant. The denial of CENVAT credit was reversed by the appellant voluntarily, and since the first order did not impose a penalty and was unchallenged, no penalty was justified. The invoices provided by the appellant showed no evidence of clandestine clearance, leading to the dismissal of charges.

7. Consequently, the Tribunal upheld the demand for MRP based assessment with interest, set aside the denial of CENVAT credit, and dismissed the recovery of Central Excise duty and penalties. The appeal was disposed of accordingly.