At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
For Petitioner: B.N. Gururaj, Advocate And For Respondents: J. Harish, AR
1. This appeal is directed against Order-in-Appeal No. 175/2012-CE dated 16.07.2012.
2. Heard both sides and produced the records.
3. On perusal of records, it transpires that Appellants heard during the period 02.04.2007 to 10.02.2009 removed dutiable goods to their own Unit on payment of duty in accordance with the Rule 8 read with Rule 9 of Central Excise Valuation Rules 2010. Although pointed out by the Audit department, the short payment was made good by the Appellant; coming to the conclusion that such short pa
Please Login To View The Full Judgment!
yment was noticed only by the department due to Audit, a show cause notice was issued for demand of interest and also for imposition of penalty. The adjudicating authority after following due process of law, confirmed demands raised with interest appropriated the amounts paid and imposed equivalent amount of penalty under the provisions of section 11(a)(c) of the Central Excise Act, 1944. Aggrieved by such an order, an appeal was preferred before the First Appellate Authority against the imposition of equivalent amount of penalty. The First Appellate Authority after granting an opportunity of personal hearing to the Appellant, upheld the Order-in-Original.
4. Learned Counsel submits that the confirmation of demand and the interest is not being contested in this appeal but the penalty imposed is contested on the ground that they had disclosed all the particulars in respect of valuation of finished goods removed to their sister concern in monthly return and cannot be accused of suppressing any fact and nothing was unearthed by the department during the Audit and all the proceedings which are initiated were out of Audit of their records and the details were recorded therein. Hence, equivalent amount of penalty is wrongly imposed on the First Appellate Authority.
5. Learned DR reiterates the findings of the First Appellate Authority.
6. On careful consideration of the submissions made by both the sides and on perusal of records, it is noticed that the contentions raised by the Appellant before the First Appellate Authority is the same as is raised before the Tribunal.
7. In my view, the contentions raised by the Appellant that the Audit Party unearthed undervaluation of finished goods from their own records, cannot be considered as suppression of facts and intent to evade duty, is an incorrect propositions from the appellants, in as much on the issue regarding under valuation, only the Appellant would know as to what is the correct value that needs to be applied for the discharge of excise liability. Having accepted the fact that during the relevant question, there was under valuation, the claim of the Appellants that equivalent penalty imposed is not in consonance with the law by the Appellant.
8. I find that the First Appellant Authority has recorded a correct reasoning for upholding the penalty imposed which I reproduce and agree with:
I find that even though short payment of duty was made good vide Sl. No. 1 and 19 both dated 31.08.2009 in their Cenvat Account for capital goods and inputs respectively and interest amount of Rs. 4,02,172/- was also paid vide challan dated 17.09.2009, the fact remains that the same was paid on being pointed out by audit. Further, in para 17 of the impugned order, the adjudicating authority has clearly given the reasons how the suppression has been carried out which I concur with. I find that the appellants contended that the whole proceeding is based on their own records and not from any independent information that the order itself records that the details came to light only from the records of the appellants and the order itself records that the details came to light only from the records of the appellants and this is not a case where the case was unearthed based on private dairies slips which had been secreted away. They contended that when they had disclosed all the particulars sought in ER1 form, they cannot be accused of suppressing any fact. I do not agree with this submission. I find that even though the information was based on their own records, the same was found on verification of the records by the audit and appellants themselves have not furnished any information or sought for any clarification on the issue on their own. The very fact that an identical issue of clearance of goods to their another units by undervaluation and evasion of duty to the tune of Rs. 18,83,558/- was noticed during the month of May 2009 by the audit party vide audit note No. 125/2009 BG II dated 26.05.2009 itself proves that the appellants are not abiding by the law and deceived consciously and are using this modus operandi to gain unwarranted benefit by misusing the provisions of the Central Excise Law, thereby suppressing the material facts from the department with the sole intention to evade payment of duty. Hence, I find that the ingredients of mens rea, willful suppression were proved and it is a case for invoking extended period under Section 11A of the Act for demand of duty and for invoking the provisions of Section 11AC for imposing penalty. In view of this, I am not able to accept the contention of the appellants that when the amount quantified by the Central Excise officer is paid no notice should have been issued and no penalty should have been imposed.
9. In view of the foregoing, I uphold the impugned order and reject the appeal filed by the Appellant