2022 (6) TMI 977 - AT - Central Excise

Evasion of Central Excise duty - non-maintenance of invoices - non-payment of applicable duty - HELD THAT - The show-cause notice alleges that the appellants have evaded duty of Rs.22,56,445/-. The verification report submitted by the Department in respect of 62 invoices as per the direction of the Bench vide order dated 15.01.2020, shows that the appellants have discharged the duty of Rs.20,91,667/-. Therefore, it is found that to that extent, the Demand does not sustain. The duty of balance amount of Rs.1,64,778/- appears to have been not paid as per the verification report. Though the appellant claims that he has paid the duty, but no evidence of the same has been provided. Moreover, the Range Superintendent has given a fair opportunity and there are no reason whatsoever to dis-believe its report and accept the submission of the appellants that the duty is paid - the duty of Rs.1,64,778/- remains to be considered paid along with interest under Section 11B of the Central Excise Act, 1944. It is found that the same is liable to be paid by the appellants. Accordingly, the equal amount of penalty is liable to be paid by the appellants under Section 11AC of the Central Excise Act, 1944. After going to the procedural infraction alleged to be committed by the appellants, it is found that the appellants have not denied the various allegation levied in the show-cause notice. It is found that the show-cause notice did not seek to impose separate penalty under Rule 26 of the Central Excise Rules, 2002 on the appellants. It only proposed to impose penalty under Section 11AC read with Rule 26 of the Central Excise Rules, 2002. As per the findings as above, it is ordered that the appellant shall pay the non-paid duty of Rs.1,64,778/- along with penalty under Rule 11 AC ibid. It is not found that there is need to impose any other penalties. Keeping in view the facts of the case that substantial allegations of the Department that the appellants have not paid duty, have fallen flat - the penalty under Section 26 is inextricably linked to the confiscation of goods as long as there is no confiscation of the goods ordered that there cannot be a case for imposition of penalty under Rule 26. Therefore, it is found that the penalty under Rule 26 cannot be sustained either on the appellant or on the Managing Director of the appellant company. Duty confirmed against the appellant is restricted to Rs.1,64,778/- - Penalty of equal demand under Section 11AC would be confirmed - appeal allowed.

Summary

Issues: Alleged evasion of Central Excise duty, non-maintenance of proper invoices, penalty imposition, procedural irregularities

Alleged Evasion of Central Excise Duty:
The case involved M/s Konark Pipes and Synthetics Pvt. Ltd., accused of evading Central Excise duty amounting to Rs.22,56,445. The investigation revealed discrepancies in maintaining invoices, non-payment of applicable duty, and the use of multiple invoice books to evade duty. The show-cause notice demanded the duty along with interest and penalties. The Additional Commissioner and the Commissioner (Appeals) upheld the findings, leading to the appeals.

Non-Maintenance of Proper Invoices and Procedural Defenses:
The appellant argued that the show-cause notice was arbitrary, emphasizing their regular duty payments and submissions. They contended that they followed proper procedures, including using a single set of invoices with self-authentication and submitting covering bills against orders. The appellant claimed that duty had been discharged for 62 invoices, supported by a verification report. The Revenue submitted a verification report confirming partial duty payment.

Penalty Imposition and Procedural Irregularities:
The Tribunal found that the appellant had evaded duty amounting to Rs.1,64,778, as evidenced by the verification report. Despite the appellant's claims of payment, no evidence was provided. The Tribunal rejected the appellant's defense, emphasizing the Range Superintendent's report and ordered the outstanding duty payment with interest and penalties under Section 11AC. The Tribunal concluded that the penalty under Rule 26 of the Central Excise Rules was not applicable as there was no confiscation of goods, and the procedural infractions were addressed through the penalty under Section 11AC.

Judgment and Orders:
The Tribunal restricted the duty confirmed against the appellant to Rs.1,64,778 and confirmed the penalty under Section 11AC. The appeal related to another issue was allowed. The judgment was pronounced on 17.06.2022 by the Appellate Tribunal CESTAT KOLKATA, with detailed analysis and reasoning provided for each issue raised in the case.