At, Customs Excise Service Tax Appellate Tribunal East Regional Bench Kolkata
By, THE HONOURABLE MR. P. K. CHOUDHARY
By, JUDICIAL MEMBER & THE HONOURABLE MR. V. PADMANABHAN
By, TECHNICAL MEMBER
For the Appellant: H.S. Abedin, AC(AR). For the Respondent: None.
1. The present appeal has been filed by the Revenue against the Orderin-Original No.04/Commr/ADJ/CE/DIB/08 dated 07.05.2008. The respondent has a factory at Itanagar, Arunachal Pradesh. During the course of verification by the Departmental Authorities it was noticed that they were manufacturing Thinner falling under Tariff Sub-heading No.38140010 of the schedule to the Central Excise Tariff Act, 1985. It was further found that the respondent has never approached the department for registration of their factory and for payment of Central Excise duty. Investigation by the department was concluded with the issue of show cause notice dated 02.08.2007 alongwith corrigendum dated 10.09.2007. Show cause notice was finalized with the issue of the impugned order. The adjudicating authority determined the value of the goods manufactured and allegedly cleared clandestinely by the respondent in terms of the Central Excise Valuation Rules, 2000. He ordered payment of central excise duty for the period August, 2003 to June, 2006. However, keeping in view the fact that the respondent’s factory was situated in the North East of India where Area Based Exemption from payment of duty was available, the adjudicating authority refrained from imposing penalty and also payment of interest. This order is being challenged by Revenue in the present appeal.
2. None is present today on behalf of the respondent. None was also present on earlier dates of hearing i.e. 16.05.2018 and 05.10.2018. Notices also not received back undelivered.
Under the circumstances we are of the view that the present appeal which has been filed as early as 2008, cannot be kept pending endlessly. Hence, the case is taken up for disposal. Shri H.S.Abedin, AC(AR) is present on behalf of the Revenue.
3. Ld. DR argued the grounds which are summarized as follows;
i) The adjudicating authority appears to have cited the wrong provision of law for confirmation of the duty demand against the respondent. Instead of upholding the demand under Section 11A of the Central Excise Act, 1944, he has cited the Central Excise Valuation Rules, 2000.
ii) Since the respondent has manufactured goods and cleared clandestinely without registration and without payment of Central Excise Duty, the ld. DR submitted that the excise duty payable will be recoverable alongwith interest. Further, in the circumstances of the case he reiterated the ground that the penalty under Section 11AC will also be liable to be paid in view of the fact that the adjudicating authority has upheld the demand for the period of five years on the basis of the show cause notice issued invoking the present clause.
4. We have considered the case records carefully. The adjudicating authority has brought out the fact that the respondent has set up a factory in Arunachal Pradesh, but has not bothered to take registration from jurisdictional Central Excise Authorities. Even though the area where the respondent’s factory is located falls within the Area Based Exemption under the Central Excise Notification No.32-33/99-CE dated 08.07.1999, it is incumbent on the respondent to complete formalities specified in the Notification and claim the benefit of such Area Based Exemption. In the absence of such course of action, the central excise duty becomes payable on the goods manufactured and cleared by the respondent.
5. The adjudicating authority has determined the value of the goods cleared during the disputed period and has arrived at the central excise duty payable and demanded the same. We note that he appears to have cited the wrong legal provision for demand of the same. The Order of the adjudicating authority is modified to the extent that the demand is confirmed under Section 11A of the Central Excise Act, 1944.
6. Since the central excise duty has been held as payable, and the same has not been paid, the interest applicable under Section 11AB will also required to be paid by the respondent.
7. The adjudicating authority has refrained from imposing penalty under Section 11AC. Show cause notice proposed not only demand of central excise duty and interest but also imposition of penalty. We note that the respondent has not bothered to complete the central excise formalities, such as registration and claim the benefit of the Notification No.32-33/99-CE (supra) and
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hence became liable to payment of central excise duty. In the fact and circumstance of the case the conduct of the respondent is to be viewed as suppression of facts and hence the penalty under Section 11AC will also be liable to be paid. The adjudicating authority has already extended the benefit of cenvat credit subject to submission of necessary documents evidencing the claim and the same is not interfered with. 8. In the result, the appeal filed by the revenue is allowed.