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TMI Blog2024 (6) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... AS-4 certificates, they had paid the differential Central Excise Duty on the value of actual cost duly determined by independent Cost Accountant and duly verified by the jurisdictional Assistant Commissioner and also paid the applicable interest thereon for the delay in payment. All the above activities are undertaken by the appellant after informing the Department about the practice in discharging their duty liability in respect of intermediate goods that arise during the course of manufacture of final products. It is not the case of the department that they knew the actual cost upon which the correct duty on intermediate goods could have been worked out, as the SCN also proposed certain addition of 15% to the base cost adopted by the appellant. There was only a different in the percentage of addition of 10% adopted by the appellant and 15% proposed in the SCN. Thus, the demand of duty by invoking the provision of Section 11A(4) of the Central Excise Act, 1944 is not sustainable. Invocation of Extended period of limitation - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of SANVIJAY ROLLING ENGINEERING LTD. VERSUS COMMR. OF C. EX., NAGPUR [ 2022 (2) TMI 893 - CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, with appropriate interest as per law. The appellant had also informed the Department about the aforesaid practice of duty payment on intermediate products by their letter dated 23.03.2011. 2.2 However, the Department objected to such practice adopted by the appellant and issued show cause notice dated 06.05.2013 demanding differential Central Excise duty of Rs.78,67,377/- under Section 11A(4) of the Central Excise Act, 1944 along with applicable interest, besides proposing for imposition of penalty under Section 11AC(4) ibid read with Rule 25(1)(a) of the Central Excise Rules, 2022.The said SCN was adjudicated by the learned Commissioner in determination of the differential duty at an amount of Rs.19,07,181/- and by dropping the differential duty proposed over and above the said amount determined by him and appropriated the said amount paid by the appellant along with interest of Rs.3,93,863/- under Section 11AA ibid. Besides he imposed penalty of Rs.19,07,181/- on the appellant under Section 11AC(1a) and further penalty of Rs.15,00,000/- under Rule 25(1)(a) ibid. Being aggrieved with the above order, the appellant has filed this appeal before the Tribunal. 3. Heard both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the receipt of the final CAS-4 certificates, the assessee have determined their differential duty liability and paid the same along with interest, I find that at the time of clearance of such goods to their sister units, the assessment of such goods was undisputedly improper and incorrect and was deliberately done with an intent to evade duty, and hence there is a wilful misstatement about the assessable value adopted by them which is misdeclared to be final value of such goods and which later on i.e., after receipt of the final CAS-4 certificates, has in fact proved to be incorrect. (b) I find that the assessee are working in a self-assessment regime, where such a deliberate defiance in non-compliance of statutory provisions is not condonable . 4.3 A plain reading of the above findings, indicate that there is apparent contradiction as the learned Commissioner had found that the appellant had himself worked out the duty to be paid at the time of clearance of goods to their sister units and discharged the same before clearance of such goods on the basis of available records. However, on ascertaining the actual cost of production involved during the relevant time from the final CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucer, manufacturer, registered person of a warehouse or a registered dealer,- (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand], whichever is greater. 16. The Tribunal considering Rule 25 has observed in its order that Rule 25 provides for imposition of penalties which shall not exceed the duty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. 18 . This issue has come up before the Andhra Pradesh High Court in case of Commissioner of C. Ex. Guntur v. Andhra Cements Limited (supra) wherein the Court has taken the view that as per Rule 25(d) of the Rules subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, he is liable to pay the penalty in terms of Rule 25 of the Rules. The Court further observed that a bare perusal of this Rule would suggest that evasion of payment of duty is not sufficient to impose penalty on a producer or manufacturer. There should be an element of intention to evade payment of duty. Unless the authorities come to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was intention to evade duty. The goods manufactured were not subject to quality control test and were kept on hold. The goods were to be cleared by quality control department and only thereafter were to be sent to packing department after quality control test was concluded. Merely because in statement, the Commercial Manager of petitioner in that case has stated that goods were manufactured, that by itself cannot be a ground for holding that goods were ready for despatch to customer. The Court, therefore, took the view that confiscation and penalty is not sustainable under Rule 173Q of erstwhile Central Excise Rules, 1944. 21 . The Apex Court judgment in the case of Union of India v. Rajasthan Spinning Weaving Mills, 2009 (238) E.L.T. 3 (S.C.) also supports the case of the respondent assessee. The Apex Court after reproducing Section 11AC in the judgment, took the view that the main body of Section 11AC lays down the condition and circumstances that would attract penalty and the various proviso enumerate the condition, subject to which and the extent to which the penalty may be reduced. The Court further took the view that the penalty provision of Section 11AC would come into p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent assessee to evade any payment of duty. It is only because of stringent financial condition, that the duty could not be paid in time and as soon as liquidity was available, duty was paid along with interest. The Tribunal has, therefore, rightly come to the conclusion that penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to Rs. 5,000/- in each matter under Rule 27 of the Rules. We, therefore, hold that no question of law, much less any substantial question of law arises out of the orders passed by the Tribunal. 25 . We, therefore, dismiss all these five Appeals without any order as to costs. 5.2 I further find that the Co-ordinate Bench of the Tribunal in the case of Sanvijay Rolling Engineering Ltd., Vs. Commissioner of Central Excise, Nagpur 2022 (379) E.L.T. 229 (Tri.-Mumbai) had held that the demand of duty invoking extended period of limitation is not invokable in case of duty demand for clearances made to its other units. The relevant paragraphs of the said order is extracted and given below: 7 . The period of dispute involved in this case is from April, 2006 to March, 2007. By invoking the proviso appended to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11A ibid. On perusal of the relevant records, we are convinced that the appellant had informed the department regarding the modus operandi adopted by it in sending the disputed goods to its sister s units and also reasonably believed that the valuation provisions contained in Rule 8 ibid should be available for such transactions. Thus, under such circumstances, the rigor itemized in the proviso clause under Section 11A should not be available to the department and accordingly, the demand, if any, should only be confined to the normal period of one year. In the present case, since the period of dispute is from 2006 to 2008 and the show cause notice was issued on 15-3-2010, we are of the considered view that confirmation of the entire adjudged demands are barred by limitation of time as per the aforesaid statutory provisions and as such, the impugned proceedings are not maintainable on the ground of limitation alone. Further, we find that the principle or doctrine of revenue neutrality is applicable in the case in hand inasmuch as the higher duty amount payable by the appellant under Rule 4 ibid would be available to the sister s unit as Cenvat credit. Furthermore, we also noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department officers were not aware of the facts, which were intentionally suppressed by the assessee, mere conducting the audit cannot prevent the departmental action in not issuing the show cause notice by invoking the extended period of limitation. 8 . In view of the foregoing discussions, we do not find any merits in the impugned order insofar as it has confirmed the adjudged demands by invoking the extended period of limitation contained in the proviso appended to Section 11A ibid. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant on the ground of limitation. 6. In view of the foregoing discussions and analysis, and in terms of the judgement of the Hon ble High Court and the order of the Tribunal, I am of the considered view that the demand of differential duty invoking extended period is not sustainable and that too when the requisite duty has been paid by the appellant after duly informing the department about the same and further additional duty was also paid upon ascertaining the actual cost through CAS-4 cost audited records along with interest due for such belated payment. For the same reason, imposition of penalty under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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