2018 (11) TMI 154 - AT - Central Excise

Validity of SCN - imposition of penalty - Entire demand with interest was paid prior to the issue of show-cause notice - applicability of Section 11(A)(1)(b) read with Section 11A(2) of Central Excise Act, 1944 - Held that - Once the appellant has paid the duty along with interest before the issue of show-cause notice, then show-cause notice should not be issued - penalty set aside, while confirming demand with interest - appeal allowed in part.

Summary

Issues:
1. Rejection of appeal by Commissioner (A)
2. Availing irregular credit on invoices
3. Short payment of duty under Legal Metrology Act
4. Payment of demand before show-cause notice issuance
5. Applicability of Section 11A(1)(b) of Central Excise Act
6. Issuance of show-cause notice only for the balance amount
7. Confirmation of penalty by Commissioner (A)
8. Defense of impugned order by AR
9. Setting aside of penalty
10. Partial allowance of appeal

Analysis:

1. The appeal was directed against the order of the Commissioner (A) rejecting the appellant's appeal. The appellants, manufacturers of lubrication preparations, had availed irregular credit on invoices over the eligibility during 2015-16. Additionally, they had short paid duty under the Legal Metrology Act. The adjudicating authority confirmed the proposal in the notice, leading to the appeal before the Commissioner (A) which was rejected.

2. The appellant contended that the impugned order contradicted binding judicial precedent. They argued that the entire demand along with interest was paid before the show-cause notice was issued. Citing Section 11A(1)(b) of the Central Excise Act, the appellant claimed that the case fell under this provision, and show-cause notice should not have been issued. Several decisions were presented in favor of the appellant's argument.

3. The appellant further emphasized that under Section 11A(3) of the Act, a show-cause notice should only be issued for the amount that falls short of the total payable. The appellant had paid the balance amount along with interest, not contesting the penalty imposed. Consequently, the penalty of the balance amount was confirmed by the Commissioner (A).

4. The AR defended the impugned order, but after considering the submissions and precedent cited by the appellant, the Judicial Member set aside the penalty imposed on the appellant. The penalty of the balance amount was confirmed as the appellant did not contest it. The appeal was partly allowed, with the penalty being adjusted accordingly.

5. In conclusion, the judgment highlighted the importance of complying with statutory provisions and paying the due amount before the issuance of show-cause notices. The decision was based on legal interpretations and precedents, ultimately resulting in the partial allowance of the appeal and the setting aside of one penalty while confirming the other.