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TMI Blog2019 (2) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... ded cost of free issue material ought to be considered while determining the assessable value and the duty at the time of clearance of the goods be determined on the total value, but suppressed the correct assessable value by taking into consideration a part of the value of the free issue material. Hence, in our opinion, the plea of the appellant that it was a bona fide mistake on the part of the appellant cannot be acceptable - the authorities below are justified in imposing penalty equivalent to the duty under Section 11AC of Central Excise Act, 1944 and the case of the appellant falls under the exclusion clause i.e. Explanation (1) of Section 11A(2B) of Central Excise Act, 1944. Benefit of reduced penalty - Held that:- The appellant has paid the entire amount of differential duty with interest before issue of show-cause notice, therefore, they are eligible to discharge 25% of the penalty in accordance with Section 11AC of the Central Excise Act, 1944. The impugned order is modified to this extent of extending 25% of the penalty amount. CENVAT Credit - duty paying invoices - supplementary invoices - Held that:- The learned Commissioner (Appeals) has not decided the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of ₹ 43,26,793/- along with interest and penalty. On adjudication, the demand was confirmed with interest and equivalent amount of penalty under Section 11AC of the Central Excise Act, 1944 and also penalty under Rule 173Q of the erstwhile Central Excise Rules, 1944 read with Rule 25 of the Central Excise Rules, 2002. Aggrieved by the said order, they filed an appeal before the learned Commissioner (Appeals), who in turn, rejected their appeal. 3. Revenue is in appeal against another order passed by the learned Commissioner(Appeals), wherein the adjudicating authority denied CENVAT Credit of ₹ 9,14,286/- availed by M/s Fuel Instrument Engineers Pvt. Ltd. on the supplementary invoices issued by M/s SPM Tools observing that since the issue of suppression in discharging the differential duty against M/s SPM Tools was yet to be decided, therefore, the adjudication order was premature, accordingly, allowed the appeal of the respondent. 4. At the outset, learned Advocate for the appellant urged a preliminary issue submitting that their factory has been situated under the jurisdiction of the Pune-II Commissionerate and the show-cause notice was issued by Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Advocate has submitted that since the differential duty was paid by M/s SPM Tools, and it does not involve suppression of facts or mis-declaration, therefore, the credit on the supplementary invoices by M/s Fuel Instrument and Engineers Pvt. Ltd. cannot be faulted with. 7. Per contra, learned AR for the Revenue has submitted that preliminary objection raised by the appellant M/s SPM Tools is not correct inasmuch as the show-cause notice was issued mentioning the File No. of Pune-II Commissionerate and address also of Pune-II Commissionerate, the reply to the show-cause notice was field by the appellant addressed to the Additional Commissioner, Pune-II Commissionerate. Therefore, signing of the show-cause notice by the Additional Commissioner, Pune-I Commissionerate cannot be said to be without jurisdiction being entrusted by the Chief Commissioner as discussed by the learned Commissioner (Appeals) in the impugned order. 8. On the issue of imposition of penalty on the appellant under Section 11AC of the Central Excise Act, 1944, the learned AR supporting the findings of the learned Commissioner (Appeals) has submitted that even though in the agreement it is clearly ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were restored upon the Chief Commissioner only vide Notfn. No. 11/2007-CE (NT) dated 1.3.2007 is incorrect as vide Notfn. No. 14/2002-CE (NT) dated 8.3.2002, as amended, does not limit the powers of the Chief Commissioner to entrust the Additional Commissioner with work of more than one Commissionerate. The issue of show-cause notice therefore by the Addl. Commissioner of Pune-I Commissionerate in respect of units of Pune-II Commissionerate cannot render a show-cause notice invalid. The contention of the appellants that the power of the Chief Commissioner to allocate the work amongst the Additional Commissioners needs to be backed by notification issued by the Board is totally unfounded as none of the Rules nor Section 37A requires the same. The reliance on Notfn. No. 11/2007- CE(NT) dated 1.3.2007 is also misplaced as the said notification only refer to the powers of the Board being delegated to the Chief com. The power of the Board is with reference to adjudication of notices mainly in respect of Commissioners (Adjudication) and not with reference to the allocation of work amongst Addl. Commissioners. 11. We do not find any discrepancy in the aforesaid observation of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s KFPL. All these overwhelming evidences show that the appellant M/s SPM Tool Pvt. Ltd. were fully aware of the fact that the total landed cost of free issue material ought to be considered while determining the assessable value and the duty at the time of clearance of the goods be determined on the total value, but suppressed the correct assessable value by taking into consideration a part of the value of the free issue material. Hence, in our opinion, the plea of the appellant that it was a bona fide mistake on the part of the appellant cannot be acceptable. Therefore, the authorities below are justified in imposing penalty equivalent to the duty under Section 11AC of Central Excise Act, 1944 and the case of the appellant falls under the exclusion clause i.e. Explanation (1) of Section 11A(2B) of Central Excise Act, 1944. The Hon ble Supreme Court in the case of UOI Vs. Rajastan Spg. Wvg. Mills Ltd. 2009 (238) E.L.T. 3 (S.C.) considering the applicability of Sub.- sec. (2B) of Sec.11A of CEA,1944 in similar circumstances laid down the principle as below: 15. Sub-section 2B of Section 11A provides that in case the person in default makes payment of the escaped amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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