In a recent case, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has held that duty under section 11A(2) of Central Excise Act, 1944 is not imposable as duty has paid before issuance of Show Cause Notice (SCN).
The appellant M/s. BPL Ltd. is engaged in the manufacture of colour TV sets and moulded components for TV sets. During the audit, it was observed that the assessee had not loaded the amortization cost of moulds supplied by M/s. Sanyo BPL for the manufacture of TV parts and according to audit objections, the appellants paid duty of Rs.30,72,696/- along with interest of Rs.3,43,918/- and informed the department requesting for waiver of show-cause notice in terms of Section 11A (2B) of the Central Excise Act, 1944. Later, a show-cause notice was issued proposing a penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002.
The show-cause notice was adjudicated by the Original Authority rejecting the request for waiver of show-cause notice under Section 11A(2B), Explanation 1 wherein it is stated that waiver of show-cause notice is not applicable in those cases where short levy is on account of fraud, collusion, or any willful misstatement or suppression or any contravention of this act and the rules made thereunder to evade payment of duty. The same was upheld by the Commissioner (A) in the impugned order.
It was submitted that immediately on audit’s observation; the differential amount was paid along with interest and a written request was made for waiver of show-cause notice. It is submitted that despite that show-cause notice was issued proposing a penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. It is claimed that neither in the notice nor in the orders was there any proposal for the demand of neither duty nor the duty was confirmed in the impugned orders. Hence, the allegation of suppression has not been proved and therefore, the question of imposition of penalty under Section 11AC of the Central Excise, 1944 does not arise.
A single-member bench of R Bhagya Devi, Member (Technical) held that penalty is not imposable as the duty has been paid before the issuance of show-cause notice and there is no determination of duty thereafter. The CESTAT set aside the impugned order and allowed the appeal.
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