No Penalty under Central Excise Act in absence of Suppression of Fact: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that penalty not imposable under Central Excise Act, 1944 in absence of suppression of fact. The Tribunal found  that the adjudicating authority has failed to show any positive act of suppression on the part of the Appellant.

M/s. Star Battery Limited,the appellant challenged the impugned Order passed by Commissioner of Central Excise, Kolkata-IV Commissionerate, Kolkata, wherein he has confirmed the demand of Rs. 68,60,128/- along with interest, on account of noninclusion of VAT realized from the customers in the assessable value. The demand has been confirmed by invoking the extended period of limitation. The adjudicating authority also  imposed a penalty of Rs.68,60,128/- under Section 11AC of the Central Excise Act, 1944.

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The Appellant submitted that the Supreme Court has decided the issue in the matter of Super Synotex (India) Ltd. vs. Commissioner of Central Excise, wherein it has been held that the sales tax concession retained by the assessees is required to be added in the assessable value for the purpose of levy of Central Excise duty; However, Board has issued Circular No. 1063/2/2018CX dated 16.02.2018 and clarified that extended period shall not be invoked in such cases.

The appellant submitted that the demand in this case  has been confirmed by invoking the extended period of limitation and the ld. adjudicating authority has imposed penalty under Section 11AC of the CEA, 1944, which is not tenable. The Appellant also contended that there is no suppression involved in this case and hence penalty under Section 11AC not imposable.

On the other hand , the Departmental Representative submitted that the issue has already been decided by the Supreme Court in the case of Super Synotex (India) Ltd. Vs Commissioner of Central Excise, Jaipur-II,  wherein it has been held that the sales tax concession retained by the assessees is required to be added in the assessable value for the purpose of levy of Central Excise duty. He also justified the penalty imposed.

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The issue involved is regarding the applicability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty. It was evident  that the Appellant has agreed for the payment of duty in respect of the normal period of limitation. It is also clear that the Appellant has not suppressed any information from the Department. Th

The Tribunal viewed that  the appellant cannot be faulted for not including the same in the assessable value. As there is no evidence of suppression of facts available on record, hat the demand confirmed by invoking the extended period is liable to be set aside.

A two member bench of R. Muralidhar, Member ( Judicial ) And K. Anpazhakan, Member ( Technical ) observed that Board has issued Circular No. 1063/2/2018-CX dated 16.02.2018, clarifying acceptance of some of the orders passed by the Supreme Court, High Courts, etc., wherein no review petition has been filed.

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The Tribunal found that the adjudicating authority has failed to show any positive act of suppression on the part of the Appellant. The details of VAT collected and retained by the Appellant are reflected in the audited Profit & Loss account and balance sheet of the impugned periods. The CESTAT held that extended period is not invokable in this case and for the same reason, penalty under Section 11AC of the Central Excise Act, 1944 is also not imposable.

While partly allowing the appeal, the bench held that “The Appellant is liable to pay duty along with interest  for the normal period of limitation. The demand confirmed by invoking the extended period of limitation is set aside.”

To Read the full text of the Order CLICK HERE

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