CESTAT held that since there is no suppression of fact, demand of extended period is not sustainable. The penalty imposed in the impugned order was held to be not warranted accordingly, the same was set aside.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
In this revenue’s appeal, revenue seeks to impose equal of penalty under Section 11AC of the Central Excise Act, 1944 as against the penalty of Rs.1 lakh was imposed by the adjudicating authority.
2. Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on behalf of the revenue submits that the adjudicating authority though imposed penalty under Section 11AC but against the total duty amount of 3,45,34,494/- only penalty of Rs. 1 lakh was imposed whereas, there is no option for the adjudicating authority except to impose penalty of equal amount of duty in terms of Section 11AC.
3. On the other hand, Shri Amber Kumarawat, learned counsel appearing on behalf of the respondent submits that against this common impugned order, the assessee had also filed an appeal before this tribunal challenging the demand of duty and penalty. In the said appeal, this tribunal vide final order no. A/11498-11501/2015 dated 15.10.2015 though confirmed the demand for the normal period but set aside the demand of extended period and also set aside the penalty imposed under Section 11AC accordingly, the penalty under Section 11AC cannot be enhanced as appealed by the revenue in the present appeal.
4. We have heard both the sides and perused the records. We find that against the common order, the respondent had also filed an appeal which was disposed of by order dated 15.10.2015 (supra) wherein, the tribunal passed the order as under:
17. However, we find force in the submissions of the learned Advocate that the extended period of limitation cannot be invoked. On perusal of the records, we find that the Appellants by letter dt.22.11.2007, informed the Assistant Commissioner of Central Excise for a clarification on any possible liability of Central Excise duty. The Appellant also pursued the matter before the Department. There is no material on record of suppression of facts with intent to evade payment of duty. The Hon ble Gujarat High Court in the case of Gujarat Glass Pvt. Ltd (supra) observed that the Assessee on his own brought to the notice of the Department the fact about the clearance of the goods to its sister unit without duty before the date of visit of the officers. The Assessee s conduct was candid and therefore, bonafide. There is no evidence of intentional evasion.
18. In the case of Anand Nishikawa Company Ltd Vs CCE Meerut 2005 (185) ELT 149 (SC), the Hon’ble Supreme Court observed that there was no deliberate attempt of non-disclosure of excise duty. No claim as to suppression of facts would be entertained for the purpose of invoking extended period of limitation within the meaning of proviso to Section 11A (1) of the Act. It is also noted that Hon ble Supreme Court in series of cases, has held that the extended period of limitation, would not be invoked in the case of revenue neutrality as the CENVAT Credit is available against the demand of duty. The learned Advocate relied upon the following decisions:-
a) Nirlon Ltd Vs CCE 2015-TIOL-96-SC-CX
b) CCE Vs Narmada Chematur Pharmaceuticals Ltd 2005 (179) ELT 276 (SC)
c) CCE Vs Coca Cola India Pvt.Ltd 2007 (213) ELT 490 (SC)
d) CCE Vs Textile Corporation Marathwada Ltd 2008 (231) ELT 195 (SC)
e) AMCO Batteries Ltd Vs CCE 2003 (153) ELT 7 (SC)
f) Jay Yuhshin Ltd Vs CCE 2000 (119) ELT 718 (Tri-LB)
g) Jay Yuhshin Ltd Vs CCE 2001 (137) ELT 1098 (Tri-Del.)
h) International Auto Ltd Vs CCE 2005 (183) ELT 239 (SC)
19. We find that the Appellant acted under a bonafide belief that the activities undertaken by them would not amount to manufacture. It is the case of interpretation of the provisions of law and therefore, the imposition of penalties on the Appellants are not warranted. It is noted that the goods were available for confiscation. It is well settled that if the goods are available, the same cannot be confiscated. Accordingly, the confiscation of goods and imposition of penalty cannot be sustained.
20. In view of the above discussions, we hold that the activities undertaken by the Appellant would amount to manufacture and Power Pack also known as Containerized Gensets would be classifiable under sub-heading No.8502.2090 of the Schedule to the Central Excise Tariff Act, 1985 and the demand of duty alongwith interest for the normal period is upheld. The Adjudicating authority is directed to extend CENVAT Credit benefit, while quantifying duty, subject to verification of record. The demand of duty with interest for the extended period of limitation and confiscation and imposition of redemption fine and penalties are set aside. The appeal filed by the Appellant company is disposed of in the above terms. The appeal filed by the Appellant No.2 Shri Montu Patwa, General Manager (F&A) is allowed. The applications for extension of stay order are dismissed as in fructuous.
From the above order, it can be seen that it was categorically held that since there is no suppression of fact, demand of extended period is not sustainable. The penalty imposed in the impugned order was held to be not warranted accordingly, the same was set aside.
5. In view of the above order, when the penalty imposed under Section 11AC was set aside, the revenue’s appeal cannot be sustained therefore, the revenue’s appeal is dismissed.
(Pronounced in the open court on 02.05.2023)