Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Pune vs Mahindra Ugine Steel Co. Ltd on 25 May, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO. E/2314/2006 (Arising out of Order-in-Appeal No. PI/110/2006 dated 07.03.2006 passed by the Commissioner (Appeals) Central Excise, Pune-I For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) ============================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Commissioner of Central Excise, Pune
:
Appellants
VS
Mahindra Ugine Steel Co. Ltd.
Respondents
Appearance
Shri N.A. Sayyad, JDR Authorized Representative
Shri Bharat Raichandani, Advocate for respondent
CORAM:
Shri Ashok Jindal, Member (Judicial)
Date of decision : 25/5/2010
ORDER NO.
Per : Ashok Jindal, Member (Judicial)
This matter has been remanded back by the Honble Apex Court to this Tribunal.
2. The facts of the case are that the respondent is the manufacturer of excisable goods i.e. press parts of Motor Vehicles and registered with the department. During the course of audit by the officers of the department, it was observed that during the year 2002-2003 and 2003-2004 the respondents has cleared scrap to their Khopoli Branch. However, they contravened the provisions of Rule 9 read with Rule 8 of the Valuation Rules 2000, inasmuch as the goods were not valued at 115% of the cost of production of manufacture of such goods. On pointing out, the respondent agreed and paid differential duty along with interest from their PLA Account. It is also observed that on price escalation, the respondent had paid differential duty by raising supplementary invoices but had not paid the interest on the same. On pointing out, the respondent paid the interest also. It was further observed that during the period 2002-2003, 2004-2005, the respondent had availed credit on Rust Preventive Oil used for job work activity, which is not admissible. On pointing out, they also reversed the duty on that along with interest. A show cause notice was issued. The demand for differential duty was confirmed along with interest and equivalent penalty was also imposed on the respondent. On appeal, before the Commissioner (Appeals) the demand of differential duty and interest was confirmed but penalty was dropped holding that as the duty and interest has been paid before the issuance of show cause notice penalty is not leviable. Relying on the various judgement of this Tribunal on the issue against the said order of dropping the penalty Revenue filed the appeal before this Tribunal and this Tribunal also relying on the judgement of CCE Vs. Gourav Marcantiles Ltd. reported in 2005 9190) ELT 11 (Bom.) drop the penalty and uphold the order of the Commissioner (Appeals). Against that order also Revenue went in appeal before the Apex Court, the Apex Court remanded the matter back to this Tribunal for disposal in the light of the decision in the case of Dharmendra Textile Processors & Others in Civil Appeal Nos. 10289-10303 of 2003. Hence this matter is before me.
3. The learned DR submitted that it is a clear suppression of facts as unless and until it was pointed out by the department, no duty could have been recovered from the respondent and the Commissioner (Appeal) had decided the issue relying on the decision of this Tribunal wherein it was held that when duty and interest has been paid before the issuance of the show-cause notice, no penalty is leviable. The said decision is now no more a good law as decided by the Honble Apex Court in the case of Dharmendra Textile Processors & Others wherein it was held that mandatory penalty under Section 11AC is leviable where it is found that there is suppression, willful misstatement, fraud collusion with intent to evade payment of duty. In this case also equivalent penalty is leviable on the respondent.
4. Heard
5. On careful examination of the show cause notice which is reproduce here as under:-
During the course of Central Excise audit on the records of the assessee it was observed that during the years 2002-03 and 2003-04, the assessee had cleared scrap to their Khopoli Branch. However they had contravened the provisions of Rule 9 read with Rule 8 of the Valuation Rules 2000, inasmuch as the goods were not valued at 115% of the cost of production or manufacture of such goods. On pointing out the same, the assessee agreed and paid the differential duty of Rs.1,38,175 vide PLA E No.7 dt. 18.5.2004 and interest of Rs. 5800/- vide PLA E No. 17 dt.16.6.2004.
It was also observed that on price escalation, the assessee had paid the differential duty by raising supplementary invoice, but they had not paid interest on the same. On pointing out the same, the assessee agreed and paid interest of Rs.11,350/- vide PLA E No.8 dt. 18.6.2004.
It was also observed that during the period 2002-03 to 2004-05 (Upto Dec.2004), the assessee had availed CENVAT credit on rust preventive oil used for job work activity, which is not admissible. On pointing out the same, they agreed and reversed duty of Rs.40651/- (BED) + Rs.323/- (Cess) vide Cenvat E.No. 1457 and 1508 dt. 15.12.2008 and also paid interest of Rs. 4445/- vide PLA E No.1736 dated 23.1.2005.
Now therefore, the assessee are hereby called upon to show cause to the Assistant Commissioner of Central Excise, Pune-I Division having office at Excise Bhavan, Near Akurdi Railway Station, Akurdi, Pune 411044 within 30 days of receipt of this notice, as to why :-
(i) Differential duty + education cess amounting to Rs.1,79,149 (Rupees One lakh seventy nine thousand one hundred and forty nine only) already paid the assessee should not be confirmed and adjusted under the provisions of Section 11A (1) of the Act.
(ii) Interest of Rs. 21,595 (Rupees twenty one thousand five hundred and ninety five only) already paid the assessee should not be confirmed and adjusted under the provisions of Section 11AB of the Act.
(iii) Penalty under the provisions of Rule 13 of the Cenvat Credit Rules 2002 read with Rule 25 of the Central Excise (No 2) Rule 2002, as amended, should not be imposed on them.
In the above show cause notice, there is no allegation against the respondent that there was any suppression, willful misstatement, fraud, collusion with intent to evade payment of duty has been made against the respondent and no proposal for imposing the penalty under Section 11AC of the Act. To impose penalty under Section 11AC, there should be suppression, willful misstatement, fraud, collusion etc. with an intention to evade payment of duty is required but in this case there is no such allegation against the respondent. In that circumstances, when there is no proposal for suppression, willful misstatement fraud, collusion of facts with intent to evade payment of duty no penalty is leviable. The Commissioner (Appeals) dropped the penalty on the ground that duty and interest has been paid before the issuance of show cause notice although is not a good law in present scenario but the absence of any allegation of suppression willful misstatement fraud, collusion with an intention to evade payment of duty against the respondent no penalty can be leveled against the respondent. Hence, I do not find any merit in the appeal, the same is rejected.
(Pronounced in court) (Ashok Jindal) Member (Judicial) Sm 5