Commissioner Of Central Excise, ... vs Benaka Sponge Iron Pvt Ltd

[Arising out of Order-in-Appeal No. 59-2008 dated 28/07/2008 passed by CCE(Appeals), Bangalore]

For approval and signature:

HON'BLE SMT. 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?

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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Commissioner of Central Excise, Customs and Service Tax BELGAUM NULL NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, - 590001 KARNATAKA Appellant(s)

Versus

BENAKA SPONGE IRON PVT LTD SY NO.138 A/1, TUMTI ROAD, BELAGAL VILLAGE, BELLARY Respondent(s)

Appearance:

Shri S. Teli, Deputy Commissioner(AR) For the Appellant

Shri A.S. Monnappa, Advocate For the Respondent

Date of Hearing: 13/02/2015

Date of Decision: 13/02/2015

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 20866 / 2015

Per : ARCHANA WADHWA

Being aggrieved with the order passed by Commissioner(Appeals) vide which he has set aside the penalty imposed upon the respondents, Revenue has filed the present appeal.

2. It is seen that the respondent is engaged in the manufacture of sponge iron and was clearing the same on payment of Central Excise duty. However in respect of clearances made to consignment agents, they discharged the duty on the assessable value available at the factory gate price. As per the Revenue, duty was required to be paid in terms of the provisions of Rule 7 of Valuation Rules, 2000 i.e. the price on which the goods were cleared by the consignment agents.

3. The respondent deposited the differential duty along with interest on 05/07/2006. Thereafter they were issued a show-cause notice on 31/10/2006 for imposition of penalty.

4. Commissioner(Appeals) vide his impugned order held, by relying upon the decision of Honble High Court of Karnataka in the case of CCE Vs. Sri Krishna Pipe Industries [2004(165 ELT 508], that when the assessee has deposited the duty before issuance of the show-cause notice, there was no requirement for imposition of any penalty.

5. The Revenues contention is that once the duty was short paid, appellant became liable to imposition of penalty and as such the law declared by the Honble Supreme Court in the case of UOI Vs. Dharmendra Textile Processors [2008-TIOL-192-SC-CX-LB] laying down that there is no discretion available under Section 11AC, would apply.

6. After appreciating the contentions of both the sides, I find that the Honble Supreme Court in the above referred decision of Dharmendra Textile Procesrs held that when Section 11AC is invocable, there is not discretion with the authorities to levy penalty less than the mandatory penalty provided under the said section. As such, the first issue required to be decided is whether Section 11AC is invocable or not. It is only thereafter that the quantum of penalty is required to be imposed in terms of the said section.

7. Admittedly, in the present case when the respondents were informed about the undervaluation of the goods, they deposited the differential duty along with interest. The goods were otherwise cleared by reflecting the statutory records and as such it can be safely concluded that there was no suppression, misstatement or any clandestine activity, with an intent to evade payment of duty, on the part of the respondent, so as to attract the penal provisions. As such, I fully agree with the impugned order of Commissioner(Appeals), vide which he has upheld the OIO passed by the original adjudicating authority, not levying any penalty. Accordingly, I find no merits in the Revenues appeal and the same is rejected.

(Pronounced in court)

ARCHANA WADHWA JUDICIAL MEMBER

Raja 4