2017 (7) TMI 388 - AT - Central Excise

Applicability of provisions of Section 11A(2B) of the Act - in respect of a few invoices the appellant while clearing the goods under CETH 8535 have not followed the MRP based assessment in terms of Section 4A of the Act - differential duty paid before issuance of SCN - Held that - Section 11A(2B) provides for closure of proceedings without issue of notice where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded the person chargeable with the duty may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him. There is no evidence on record to sustain the allegation of wilful misstatement fraud or intention to evade payment of duty. Apparently the longer period of short payment alone was considered as reason enough for non-closure of case under Section 11A(2B). This much has been recorded by the lower authorities also. We find the short payment spread over longer period by itself will not bar the closure of case without SCN. While upholding the payment of differential duty alongwith interest by the appellant the penal proceedings against the appellant are found to be untenable - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Applicability of Section 11A(2B) of the Central Excise Act
- Intention to evade payment of duty
- Imposition of penalty under Section 11AC

Analysis:

Issue 1: Applicability of Section 11A(2B) of the Central Excise Act
The appellant, engaged in manufacturing liable to Central Excise duty, faced a discrepancy in the assessment of duty for certain products under CETH 8536. The appellant voluntarily calculated and paid the differential duty along with interest without any demand. The lower authorities invoked Section 11A(2B) to refuse closure of the case, citing the Explanation that prevents closure in cases of fraud, collusion, or intentional duty evasion. However, the Tribunal found that the authorities failed to provide evidence for extending the demand period and did not establish the elements required for non-closure under Section 11A(2B). Since there was no evidence of wilful misstatement or intention to evade duty, the Tribunal concluded that the proceedings should not have been initiated against the appellant.

Issue 2: Intention to evade payment of duty
The appellant contended that the duty difference paid with interest was not being contested, emphasizing the absence of any intentional short payment of duty. The appellant, a well-established manufacturing unit with significant Central Excise duty payments, acknowledged the assessment error for a few items and argued for the closure of proceedings without penalties. The Revenue argued that repeated short levies over time justified invoking Section 11AC. However, the Tribunal found no evidence of wilful misstatement or intention to evade duty, leading to the setting aside of the penalties imposed on the appellant.

Issue 3: Imposition of penalty under Section 11AC
Despite upholding the payment of differential duty by the appellant, the Tribunal deemed the penal proceedings untenable due to the lack of evidence supporting intentional duty evasion. Consequently, the penalties imposed on the appellant were overturned, and the appeal was allowed in this regard.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the absence of evidence for intentional duty evasion and the failure to establish the necessary elements for non-closure under Section 11A(2B). The penalties imposed were set aside, highlighting the importance of evidence in cases involving duty discrepancies and intentional evasion.