Custom, Excise & Service Tax Tribunal
M/S. Jeevan Diesels And Electricals Ltd vs Cce, Pondichery on 4 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/426/2012
(Arising out of Order-in-Original No. 17/2012 dated 08.06.2012 passed by the Commissioner of Central Excise, Pondicherry).
M/s. Jeevan Diesels and Electricals Ltd. : Appellant
Vs.
CCE, Pondichery : Respondent
Appearance Shri K.S. Jain, Managing Director,for the Appellant Shri Veerabadra Reddy, JC (AR), for the Respondent CORAM Honble Shri R. Periasami, Technical Member Honble Shri P. K. Choudhary, Judicial Member Date of Hearing: 24.02.2016 Date of Pronouncement: 04.03.2016 FINAL ORDER No. 40408 / 2016 Per R. Periasami Appellant filed this appeal against the order of the Commissioner of Central Excise, Pondicherry dated 08.06.2012.
2. The brief facts of the case are that the appellants are 100% EOU engaged in the manufacture of Diesel Generating sets with control panels, switchgears, Enclosures and accessories etc. and they are entitled upto 50% of the FOB value of exports into DTA sales. They have cleared the goods to their DTA unit in the month of January, April, May and August, 2011, without payment of duty. Accordingly, a show cause notice dated 20.01.2012 was issued to the appellant demanding duty of Rs. 1,12,25,765/- along with the proposal for interest and penalty under Section 11AC of the Central Excise Act, 1944 and also under Rule 25 of Central Excise Rules, 2002. The adjudicating authority in his order confirmed the demand of Rs. 1,12,25,765/- under Section 11A (4) of the Central Excise Act, 1944 read with Section 11D of the Central Excise Act, 1944, and also appropriated entire duty amount paid by them and adjusted towards the demand and also demanded interest of Rs.17,35,425/- and appropriated an amount of Rs. 15,47,788/- paid by them and adjusted towards the interest and imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. Hence, the present appeal.
3. Heard both sides. Shri K.S. Jain, Managing Director of the appellant Company appeared and reiterated the grounds of appeal. He submits that the appellant is contesting only that portion of the interest amount of Rs.1,87,637/-, which is not paid and Section 11AC penalty. As regards interest he drew attention to page 16 & 17 of the paper book, where they have computed the interest from the due date to the date of payment and paid the interest of Rs. 15,47,788/- and they are not required to pay interest more than what was already paid. The interest has been calculated from the due date for payment ie. 5th of next month, till the date of payment @ 13% interest. As regards penalty, he drew attention to para -2 of the Order-in-Original and submits that there is no suppression of facts with an intention to evade payment of duty. They are being 100% EOU, they have filed ER-2 returns regularly for April, May and August, 2011 and also clearly indicated the duty amount payable but not paid. He drew attention to para-10 of the Order-in-Original and submits that entire amount of duty was paid on various dates and the last installment was paid on 15.04.2012, before passing of the adjudication order. He prays for waiver of penalty as there is no mis-declaration and intention to evade payment of duty and there is no suppression of facts. He further submits that the Company is under BIFR.
4. On the other hand, the Ld. AR, Shri Veerabadra Reddy, JC (AR) reiterated the findings of the Order-in-Original and drew attention of the Bench to paras 9 & 10 of it and submits that the appellants have cleared the goods without payment of duty. Therefore, show cause notice has been issued for non-payment of duty and the demand has been rightly raised and the adjudicating authority has rightly confirmed the duty demand. He further submits that regarding interest, from January to March, 2011, the interest to be paid as applicable was @13% and from April, 2011 to 05.04.2012, statutory interest applicable was @18%. Hence, the interest is rightly demanded. Regarding penalty, he submits that the show cause notice was issued on 20.01.2012, whereas the appellants paid the duty on various dates as recorded at para-10 of the OIO from 8th October, 2011 to 05.04.2012. He further submits that this is not the case that the appellants have paid the duty amount before the issue of show cause notice. Therefore, the penalty also has been rightly imposed on them. In this regard, he relies on the following decisions:
1. Godrej Hershey Ltd. Vs. CCE, Bhopal 2011 (263) ELT 663 (Tri.-Del.)
2. Vidushi Wires Pvt. Ltd. Vs. UOI 2003 (156) ELT 168 (Bom.)
5. After hearing both sides we find that the appellants contested only a portion of interest not paid and penalty imposed under Section 11AC read with Rule 25 as they have already paid the entire duty demanded and the same was appropriated in the OIO itself.
5.1 As regards the demand of interest, we find that the adjudicating authority has confirmed the interest of Rs.17,35,425/- for the delayed payment of duty and also appropriated an amount of Rs. 15,45,788/- paid by them towards interest. The dispute is only on the differential interest amount of Rs. 1,87,637/-. The appellants contention is that the duty not paid for the month of January, 2011, only 13% interest was chargeable from the due date till the payment of duty and not 18%. On perusal of the records and date of payment, we find that the appellants have paid duty on various dates ie. on 8/10/2011, 12/12/2011, 31/3/12 and 05/04/2112. We also find that the statutory interest prescribed during the period from January to March, 2011 @ 13% and from 01.04.2011, the statutory interest has been increased to 18%. The adjudicating authority had rightly computed the interest amount from the due date to till the date of payment in respect of demand for the month of January, 2011. Since the appellants paid the amount on 8.10.11, 12/12/2011 and 31.03.12, Revenue has correctly worked out the interest @ 13% upto 31.03.2011 for 54 days and for the remaining period the interest was computed by adopting 18% rate of interest. Whereas, on perusal of the computation done by the appellants at page 16 and 17 of the paper book for the total delayed payment of duty for the month of January, 2011 they have computed by taking the rate of interest @13%. Therefore, we do not find any merit in the appellants contention and they are liable to pay the total interest of Rs.17,35,425/-. Since they have already paid the interest of Rs.15,45,788/-, the differential amount of interest of Rs.1,87,637/- is liable to be reversed.
5.2. As regards penalty, on perusal of the show cause notice, we find the penalty was proposed under Section 11 AC of the CEA as well as under Rule 25 of CER. The adjudicating authority in his order imposed equivalent penalty under Section 11AC read with Rule 25 of CER and no separate penalty imposed under Rule 25. The appellants main contention is that there is no suppression of facts and there is no intention to evade payment of duty and it is only delayed payment of duty, which they have paid subsequently along with interest before adjudication order. On perusal of the impugned order, we find that the appellant being 100% EOU, regularly filed ER-2 returns, for the month of January, April, May and August, 2011, which was clearly recorded in para-2 of the impugned order. We also find that the department came to know the non-payment of duty only from the said ER-2 returns and initiated proceedings. The adjudicating authority recorded in his findings that they have indicated the duty amount in the column duty payable but the column under duty paid was left blank. We find that the entire case is basically of delayed payment under Rule 8 and the consequential demand by the department. We find that the show cause notice was issued on 20.01.2012. Before the issue of SCN itself, the appellant paid Rs.25,00,000/-, Rs.20,00,000/- was proposed for appropriation in the SCN and the balance amount was paid with interest before issue of adjudication order. Therefore, we hold that there is no mensrea or intention to evade payment of duty so as to invoke penalty under Section 11 AC. Accordingly, the penalty imposed under Section 11AC is not sustainable and liable to be set aside. As regards penalty proposed under Rule 25 of CER, the adjudicating authority imposed penalty by invoking Section 11 AC read with Rule 25 of CER. We hold the appellants are liable for penalty under Rule 25 of CER.
6. In view of the foregoing discussions, the impugned order is upheld to the extent of confirmation of demand and interest. The equivalent penalty imposed on the appellants under Section 11 AC is set aside. We impose penalty of Rs. 5,00,000/- under Rule 25 of CER. Accordingly, the appeal is partly allowed.
(Order pronounced in the open Court on 04.03.2016)
(P.K. CHOUDHARY) (R. PERIASAMI)
Judicial Member Tehnical Member
BB
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