The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashes the penalty as the excise duty demand order was time-barred.
In this case, the issue is common in all the appeals and are arising out of a common order, due to which all are disposed by a common order.
This case involves multiple appellants, such as M/s. Vardhaman Products and M/s. Atishay Pure Products, including manufacturers of excisable products such as pan masala, mouth fresheners, and sweet supari.
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A common show cause notice ( SCN ) was issued to several parties on 30.01.2012. The SCN alleged duty evasion during the financial years 2007-08 to 2009-10. The primary issue was whether the appellants improperly paid excise duty under Section 4A of the Excise Act,1944 while the department contended that the duty should have been paid under Section 4. The show cause notice invoked an extended period of limitation under Section 11A(4) of the Act to recover duties, penalties, and interest.
Although the issues were contested by the appellants, the adjudicatory authority was not satisfied and demanded duty and imposed a penalty from the appellant through the impugned order.
The appellants who were aggrieved by the impugned order approached the CESTAT for relief.
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The counsel on behalf of the appellant contended that the extended limitation period under Section 11A(4) of the Excise Act could not be invoked as the refund claims had been sanctioned after proper audit and scrutiny by the department. It was further contended that their method of paying duty was consistent with the department’s own guidance and clarifications.
The bench observed that no excise duty demand is sustainable against the appellants on limitation, therefore, no penalty can be imposed on the appellants. The tribunal noted that the appellants had complied with the instructions issued by the Central Excise Department regarding the method of payment of duty.
The bench noted that the periodic refunds of duty had been scrutinized and approved by the department, which prevented the department from invoking the extended limitation period without first challenging the refund orders.
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The CESTAT bench, comprising Ashok Jindal (Member Judicial) and K. Anpazhakan (Member Technical), allowed the appeal and set aside the imputed order.
The appellants were represented by Advocate S. Bagaria and Advocate I. Banerjee and the revenue was represented by Authorized Representative Subrata Debnath.
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