2019 (9) TMI 240 - AT - Central Excise

Penalty u/s 11AC of CEA - differential duty payable due to determination of the cost of production, applying CAS-4 method on the data available on monthly basis - suppression of facts or not - HELD THAT - There is no dispute of the fact that by applying CAS-4 method with appropriate data, the differential duty of ₹ 3,16,512/- became payable by the appellant. The appellant has not disputed the amount on merit and a part of it was paid by them along with interest. During the relevant period, by applying CAS-4 method on monthly basis, they have paid duty on the stock transferred goods to their sister unit where they availed MODVAT credit. The department applying the CAS-4 method correctly redetermined the value and accordingly, differential duty of ₹ 3,16,512/- became payable. There is no suppression of fact or malafide intention on the part of the appellant in discharging lesser duty involving normal period - the imposition of penalty under section 11AC of Central Excise Act, 1944 is not warranted and the same is set aside - appeal allowed in part.

Summary

Issues:
1. Imposition of penalty under section 11AC of Central Excise Act, 1944 on the appellant.

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals) regarding the imposition of a penalty under section 11AC of the Central Excise Act, 1944. The appellant, engaged in the manufacture of PVC Pipes fittings, had cleared goods to another unit for captive consumption during the relevant period of 2008-09. The appellant had applied the CAS-4 method to determine the cost of production, leading to a differential duty demand of ?3,16,512. The appellant disputed the penalty imposed by the Commissioner (Appeals) while not contesting the liability of the differential duty.

The appellant argued that the penalty under section 11AC was unwarranted as they had paid a portion of the differential duty along with interest. The Tribunal found merit in the appellant's contention, noting that there was no suppression of fact or malicious intent on the appellant's part. The duty discrepancy arose from the application of the CAS-4 method, which led to the revaluation of the goods transferred to the sister unit. As there was no evidence of deliberate evasion or wrongdoing by the appellant, the Tribunal concluded that the penalty under section 11AC was not justified.

Therefore, the Tribunal partially allowed the appeal by setting aside the penalty imposed under section 11AC of the Central Excise Act, 1944. The decision highlighted that the penalty was not warranted in this case due to the absence of any fraudulent intent or deliberate non-compliance on the part of the appellant.