The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench authority cannot mechanically impose penalty for short levy or non-levy of duty u/s 11AC of Central Excise Act, 1994.
N.K. Chowdhury, Advocate for the Appellant, submitted that subsequent to audit observation, it was noticed that the Appellant, M/s Micky Metals Limited had stock transferred their finished goods to depot at Gaziabad Branch after paying Central Excise duty at factory gate and subsequently sold the same from the depot at Gaziabad Branch.
Audit observed that the assessee had adopted the valuation in respect of their finished goods cleared to depot at Gaziabad Branch on the basis of transaction value under Section 4 (1)(a) of the Central Excise Act, 1944 instead of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 as amended.
The Appellant immediately accepted their default and paid the entire amount of Central Excise duty to the tune of Rs.4,80,276/- along with interest of Rs.1,10,263/-. Subsequently, Show- cause notice was issued to the Appellant, which was adjudicated. The Appellant filed appeal before the Commissioner (Appeals) for setting aside the equal amount of penalty imposed under the provisions of Rule 25(1)(d) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. However, the Commissioner (Appeals) rejected the appeal before him and upheld the penalty.
A Coram consisting of P K Choudhary, Judicial Member observed that” Thus, in the absence of any such specific allegation in the show cause notice, the authority cannot mechanically impose penalty under Section 11AC of the Act. The provisions of Section 11AC of the Act are attracted in the event of establishing fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. This has not been done in the present case. Moreover, the duty itself has been remitted on 26.03.2015 even prior to issuance of show-cause notice.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
