In a recent ruling of The Customs Excise and Service Tax Appellate Tribunal, Chennai it was decided that no penalty should be imposed under Section 11AC of Central Excise Act for Show Cause Notice ( SCN ) issued after the payment of duty.
The Appellant, M/s.CnF Automotive India Pvt. Ltd., Orgadam, Kancheepuram , manufactures molded plastic automobile components for supply to M/s. Hanil Automotive India Pvt. Ltd., Sriperumbudur. The appellants were found amortizing the cost of moulds by including the value of moulded components and discharging the duty of components supplied to M/s. Hanil.
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The issue in the appeal was related to non-inclusion of amortized value of the molding machines supplied free of cost by M/s. Hanil to the appellants. The moulding machines were supplied along with the tax invoices on which CENVAT credit was taken by the appellant, they were of the view that amortization of the cost of the machines is not required.
A preventive check was conducted by the officers of Commissionerate on 28.08.2012, following which the appellant was directed to amortize the cost of moulding machines supplied free of cost by including the value in the value of the finished goods manufactured and cleared to M/s. Hanil.
The appellant had calculated the duty as Rs.2,94,268/- which was paid on 13.08.2012 and the interest of Rs.30,160/- on 10.09.2012.
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A Show Cause Notice ( SCN ) on 28.12.2012 by the Deputy Commissioner of Central Excise, Chennai, for appropriation of the amounts if duty and interest paid along with a proposal for imposing penalty under Section 11AC of the Central Excise Act.
On Adjudication of the SCN the differential duty of Rs.2,94,268/- and interest of Rs.30,160/- paid were appropriated along with a penalty Rs.2,94,268/- was imposed.
An appeal was filed before the Commissioner of Central Excise ( Appeals-II ) who upheld the order of the Original Adjudicating Authority which mandated penalty.
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The counsel for Appellant Advocate N. Viswanathan submitted that they had informed the receipt of the moulding machines and taking of the credit of the duty paid on machines in their records, no findings were recorded in the adjudication orders of the Lower Authorities that the appellant had deliberate intention to evade payment of duty which is essential to invoke provisions under Section 11A(4) of the Central Excise Act,1944.
It was also submitted that receipt of moulding machines was different from the moulds which are consumables, further they had taken credit of the duty paid on machines which was a bona fide mistake on their part.
They also argued to have paid differential duty and interest within a short period of being informed which indicates that there was no deliberate intent to evade payment of duty. The appellant’s counsel prayed for setting aside the penalty imposed.
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Judicial member P Dinesha and Technical member Vasa Seshagiri Rao observed that the appellant had accepted the need to include the amortized cost of capital goods supplied free of cost of the capital goods supplied free of cost in the value of finished products supplied to M/s. Hanil.
It was also observed that the impugned order cannot be sustained only on the issue of imposition of penalty under 11AC of Central Excise 1944.
Therefore the appeal was allowed.
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