2017 (5) TMI 667 - AT - Central Excise

Job-work - assessee were not paying excise duty on job charges on the belief that the goods based on job work is not liable to duty - time limitation - penalty u/s 11AC - Held that - appellant was knowing that the activity is amount to manufacture and liable to duty as they were discharged their duty on their own product and were not paying duty in respect of goods manufactured on behalf of the traders on job work basis. Therefore bonafide of the appellant is not proved. The case of the non payment of duty was detected through investigation carried out by the departmental officers and not by suo moto disclosure of the fact by the appellant - there is clear suppression of fact on the part of the appellant, therefore demand is not hit by limitation - For this reason penalty imposed u/s 11AC is also legal and proper, which do not require any interference hence the demand of duty and consequential penalty u/s 11AC are maintained. Confiscation - penalty - Held that - the goods had been cleared and was not available for confiscation. Only those goods are confiscated which are available for confiscation and then only consequential redemption fine can be demanded. Redemption fine is for the purpose of redeeming the goods, if there is no goods available there no question of redemption the goods, accordingly non availability of the goods cannot confiscated nor redemption fine can be demanded - confiscation and redemption fine set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Duty liability on goods manufactured through job work
- Time bar for demand and penalty under Section 11AC
- Imposition of redemption fine on goods cleared without payment of duty
- Allegation of suppression of facts by the appellant

Analysis:
1. Duty liability on goods manufactured through job work:
The case involved the appellant, engaged in manufacturing steel pipes and tubes, who also performed job work for traders without paying excise duty on the belief that job work goods were not liable to duty. The adjudicating authority confirmed the duty demand, penalty, and interest. The Commissioner(Appeals) set aside the demand and penalty, leading to appeals from both the appellant and the Revenue. The appellate tribunal upheld the duty demand and penalty under Section 11AC, as the appellant knowingly avoided duty payment for goods manufactured through job work, indicating no bonafide intention.

2. Time bar for demand and penalty under Section 11AC:
The appellant argued that the demand was time-barred due to the absence of suppression of facts, as observed by the original adjudicating authority. However, the tribunal found that there was clear suppression of facts by the appellant, as the non-payment of duty was detected through departmental investigation, not voluntary disclosure. Consequently, the demand was not hit by limitation, and the penalty under Section 11AC was deemed legal and proper, leading to the maintenance of duty demand and penalty.

3. Imposition of redemption fine on goods cleared without payment of duty:
Regarding the redemption fine, the appellant contended that since the goods were neither seized nor released provisionally under bond, they were not available for confiscation, making any redemption fine inapplicable. Citing a relevant judgment, the tribunal agreed that only goods available for confiscation could attract a redemption fine. As the goods were not available for confiscation, the redemption fine imposed by the Commissioner(Appeals) was set aside, modifying the impugned order accordingly.

4. Allegation of suppression of facts by the appellant:
The appellant argued against the allegation of suppression of facts, emphasizing the observations of the adjudicating authority regarding the absence of suppression. However, the tribunal noted that while the observations pertained to confiscation of goods and penalty, the overall facts of the case indicated clear suppression by the appellant. The tribunal upheld the penalty under Section 11AC, as the appellant's actions did not demonstrate a bonafide intention, leading to the maintenance of duty demand and penalty.