Relief to Universal Bituminous Industries, No Penalty u/s 11A (4) in the Absence of Tax Evasion: CESTAT [Read Order]

Relief to Universal Bituminous Industries, the Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that penalty under section 11A (4) of the Central Excise Act,1944 is not permissible in the absence of tax evasion.

M/s. Universal Bituminous Industries Pvt. Ltd, the appellant engaged in the manufacturing of Bitumen Emulsion (Excisable) and Blown Bitumen (Non-excisable) and trading of various items, out of which major items are Anti Corrosive, (Black Bitumen Paint), Bitumen Compound, Debonding strip, Sealing compound and Wrap Crat paper.

A Show Cause Notice dated was issued demanding an amount of Rs. 67,505/- (i.e 6% of 10% of traded goods) on traded items to the tune of Rs.1,12,50,819/- during the Financial Year 2013-14 2.2. The Adjudicating Authority confirmed the demand and ordered for recovery of Rs.67,505/- under Rules 6(3) of the Cenvat Credit Rules, 2004 read with section 11A(4) of the Central Excise Act, 1944. A penalty of an equal amount was also imposed. On appeal, the Commissioner (Appeals) upheld the Order of the Adjudicating Authority.

A Coram comprising Mr P K Choudhary, Member (Judicial) observed that it has been mentioned in the certificate that the company purchases various trading items from various parties by payment of Central Excise duty on prevailing rate. It has been certified that the Company maintains a separate register for the purchase of trading items.

It was observed by the Tribunal and the Superior Courts that, when separate records are maintained for taxable/exempted items, there is no occasion to reverse the proportionate Cenvat Credit. In the present case, the appellants have all along submitted that they maintained separate records for trading items and this was brought to the notice of the authorities below.

Further, the appellant filed all the statutory returns and therefore the allegation of fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act or of the Rules made thereunder with an intent to evade payment of duty is not valid.

While allowing the appeal, the impugned orders were set aside. Mr Prashant Kapani, Director for the Appellant and Mr S. S. Chattopadhyay, Authorized Representative for the Respondent.

To Read the full text of the Order CLICK HERE

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