Case Law Details
Brief Facts of the case:
Appellant(Assessee) imported three machines and cleared EPCG license at concessional rate of 5% where CVD is exempted and the appellant availed credit of Rs.48,52,516/- as per the assessment of the Bill of Entry. Adjudicating authority in his order confirmed the demand and also appropriated the interest amount and imposed equivalent penalty under Section 11AC treating the case to be of suppression of the facts with intent to avoid the payment of duty. On appeal to CCE(A) , the penalty was upheld , therefore, the assessee preferred an appeal before the CESTAT Chennai.
Contention of the Assessee:
The learned counsel for the assessee submitted that the all the import and export clearances and payment of duties were handled at their Head office located at Tiruppur. The capital goods were received in their unit at Tarapuram. He further submitted that in the Bill of Entries cleared under the EPCG license, it is clearly indicated the assessment details, Basic Customs Duty, CVD amount.
Mr. K. Palanisamy in charge of administration at the factory had inadvertently took the credit of CVD on three Bills of Entry on the belief that CVD has been paid as per details given in the B/E which is a genuine mistake (which was infact not payable as the clearance was under EPCG license thus exemption was availed). Due to communication gap between the head office and the factory the lapse happened.
As soon as it was detected by the internal officers who visited the factory on 12.1.2004 and on being pointed out by the audit, they immediately accepted and reversed the entire credit on 31.1.2004 and also paid the interest amount of Rs.6,20,739/- on 20.2.2004. Further, he contended that this is a case clearly covered under Section 11A (2B) as clearly which authorizes not only voluntary payment but also payment of duty as pointed by officers. The investigation did not led to any new facts or suppression as they have clearly admitted the mistake at the time of audit itself. Imposition of penalty is not warranted as they have already paid duty and interest as per audit objection.
Contention of the Revenue:
The learned counsel for the Revenue submitted that as the goods were cleared without payment of CVD under EPCG license, they have deliberately taken credit and utilized the same. Suppression of facts and intention to evade payment is established and it was paid only on being pointed out by the audit.
Therefore, penalty is leviable as the contravention was intentional with the intent to claim excess Cenvat credit.
Decision of the CESTAT:
The tribunal after hearing the rival submissions observed that it is a bonafide mistake of the employee of the company who took the credit of CVD amount mentioned in the assessed Bill of Entry. Such mistake crept due to communication gap between HO and the unit. There appears to be no suppression of facts with intention to evade payment of duty as alleged by Revenue.
Reliance is placed on the decision of Hon’ble Karnataka High Court in the case of CCE Bangalore Vs Geneva Fine Punch Enclosures Ltd. where Section 11AC penalty has been set aside and held that as there is no deliberate intention to evade payment of duty.
It is only in cases duty is determined coupled with the fact that the duty is evaded by a reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of this Act or the rules made there under with intent to evade payment of duty, the liability to pay penalty arise. As in the present case since the assessee without contesting the claim voluntarily pays the duty and interest payable thereon for the delay in payment of duty on the stipulated day, the question of the Officer determining the duty payable would not arise
Thus, the penalty imposed by the CE officer is deleted and the case decided in the favour of assessee.
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