Custom, Excise & Service Tax Tribunal
Jas Telecom Pvt. Ltd vs Commissioner Of Central Excise, ... on 29 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/1490/2011-SM [Arising out of Order-in-Appeal No. 58/2011 dated 11/03/2011 passed by the Commissioner of Central Excise, Bangalore] For approval and signature: HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes JAS Telecom Pvt. Ltd. No.26-H, Veerasandra Industrial Area, Hosur Road, Bangalore - 560 100 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I Post Box No. 5400, CR Buildings, Bangalore 560 001 Karnataka Respondent(s)
Appearance:
Mrs. Vijaya Prakash, Advocate 543, 12th Cross, 8th Main, J.P Nagara, 2nd Phase, Bangalore 560 078 Karnataka For the Appellant Mr. S. Teli, AR For the Respondent Date of Hearing: 29/05/2015 Date of Decision: 29/05/2015 CORAM:
HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. 21341 / 2015 Per: ARCHANA WADHWA The appellants are engaged in the manufacture of dutiable as also exempted goods. During the period July 2006 to September 2006, they availed the credit of duty paid on the inputs used in the manufacture of both the final products. Inasmuch as they were also manufacturing exempted goods, they were required to either maintain the separate accounts for the inputs or to reverse the credit availed in respect of the inputs used in the exempted goods. Neither of the procedures was followed by them.
2. Revenue in December 2006 pointed out to the said contravention on the part of the assessee, who immediately agreed to the same and reversed the credit of Rs. 8,85,810/- (Rupees Eight Lakhs Eighty Five Thousand Eight Hundred and Ten only) along with interest of Rs. 44,986/- (Rupees Forty Four Thousand Nine Hundred and Eighty Six only) in the month of December 2006 and January 2007 itself. Thereafter vide their letter dated 16.01.2007 they requested the Joint Commissioner for waiver of the show-cause notice in terms of Section 11A(2B) of the Central Excise Act, since the duty was paid along with interest immediately, on being pointed out by the Revenue.
3. However subsequently they were issued a show-cause notice on 16.09.2008 for imposition of penalty. The said show-cause notice resulted in passing of an order by the lower authorities imposing penalty to the extent of Rs. 8,85,810/- (Rupees Eight Lakhs Eighty Five Thousand Eight Hundred and Ten only) i.e. equal to the excess credit availed by the appellant. The order of the original adjudicating authority was upheld by the Commissioner (Appeals). Hence the present appeal.
4. The Commissioner (Appeals) referred to the Honble Supreme Courts decision in the case of Union of India Vs. Dharmendra Textile Processors [2008 (231) ELT 3 (S.C)] laying down that mandatory penalty under Section 11AC equivalent to the duty evaded is warranted. He also referred to some other decisions laying down that once a case is covered by a situation mentioned in Section 11AC, mere deposit prior to the issuance of show-cause notice will not necessarily negate the situation mentioned in the said Section.
5. The question required to be decided in the present appeal is as to whether there was any malafide on the part of the assessee to avail the credit in respect of the exempted goods also. As per learned advocate such availment was with the due knowledge of the Revenue inasmuch as the same was being reflected in their statutory records as also in returns. This was an action of ignorance on their part and not being aware of the law. Inasmuch as it was being availed with the knowledge of the Revenue by reflecting the same in the statutory records and inasmuch as they deposited the entire amount along with interest on being pointed out by the Revenue, the situation as envisaged under Section 11A (2B), would prevail. In such a scenario the Revenue should not have issued any show-cause notice.
6. I agree with the above contention of the learned advocate. The Revenue had pointed out the anomaly in December 2006 and the appellant deposited the entire amount along with interest of Rs. 44986/- (Rupees Forty Four Thousand Nine Hundred and Eighty Six only) immediately. The payment of interest by the appellant is in fact penal in nature and is required to be considered as a substitute for the contravention committed by them. The provisions of Section 11A (2B) actually covers such situations only. In my view the said Sections stand introduced by the Legislature so as to avoid and reduce litigation. If the Revenue is still insisting on issuing show-cause notice in such cases, the entire purpose of the said Section gets defeated.
7. Having said so, I set aside the penalty imposed upon the appellant and allow the appeal with consequential relief.
(Order pronounced in open court) (ARCHANA WADHWA) JUDICIAL MEMBER iss