2018 (3) TMI 1118 - AT - Central Excise

Penalty - Valuation - amortized cost of the Dies/Moulds being provided by the customer for whom the appellant is doing the job-work - Held that - as regards the absence of any mala fide has been arrived at by him, in which case, we agree with the learned Counsel that no penalty is required to be imposed - penalty of ₹ 5000/- imposed by the original adjudicating authority was not challenged by the appellant, and as such the said penalty would remain - appeal allowed in part.

Summary

Issues Involved:
Determining whether the amortized cost of Dies/Moulds provided by the customer for job-work should be added to the assessable value of the product; Assessing the penalty equivalent to the duty amount in case of evasion of duty.

Analysis:

Issue 1:
The main issue in the appeal is whether the amortized cost of Dies/Moulds provided by the customer for job-work should be included in the assessable value of the product. The appellant argued that they did not receive the cost information from the principal manufacturer, causing a delay in paying the duty. Despite the demands being raised invoking a longer period of limitation, the duty was eventually paid after obtaining the necessary information. The appellant contended that there was no suppression on their part. The Larger Bench decision in Mutual Industries Ltd. was cited, which had ruled on a similar issue against the appellant.

Issue 2:
Regarding the penalty equivalent to the duty amount, the original adjudicating authority imposed a penalty of ?5000, considering the absence of mala fide intent or suppression on the part of the assessee. However, the Commissioner (Appeals) increased the penalty to ?1.61 lakhs, equivalent to the duty amount, on appeal by the Revenue. The appellant argued for restoring the original penalty amount imposed by the adjudicating authority. The Revenue contended that in cases of duty evasion, a penalty equal to the duty amount is mandated under Section 11AC of the Central Excise Act, 1944.

Judgment:
After considering the arguments, the Tribunal noted the absence of mala fide intent as found by the original adjudicating authority. The Tribunal agreed that no penalty was warranted in such circumstances. However, since the appellant did not challenge the ?5000 penalty imposed by the original adjudicating authority, that penalty amount was upheld. The Tribunal confirmed the demand along with interest but set aside the Commissioner (Appeals) order and restored the original adjudicating authority's decision on the penalty. The appeal was disposed of accordingly.