Empee Offset Pvt. Ltd vs Commissioner Of Central Excise, Pune-I

[Arising out of Order-in-Appeal No. PI/RKS/03/2011 dtd. 4/1/2011 passed by the Commissioner (Appeals), Central Excise, Pune-I]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Empee Offset Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise, Pune-I : Respondent

Appearance

Shri Bharat Raichandani, Advocate for the Appellants Shri N.N. Prabhudesai, Superintendent (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 3/6/2015 Date of decision: 3/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in-Appeal No. P1/RKS/03/2011 dated 04.01.2011 passed by the Commissioner (Appeals), Central Excise, Pune-1, wherein Ld. Commissioner (Appeals) upheld the Order-in-Original No. PI/ADC/40/CEX/2010 dated 24.09.2010 and appeal filed by the appellant was rejected.

2. The fact of the present case is that the appellant engaged in the manufacture of various excisable goods. On scrutiny of the ER-1 return filed by the appellant for the May 2007, it was noticed that appellant failed to pay Central Excise duty amounting to Rs.4,98,859/- by 5th of succeeding month as prescribed under Rule 8 of Central Excise Rules, 2002. The outstanding payment of duty in respect of clearances affected in the month of May, 2007 was discharged on 27/8/2007 alongwith interest of Rs.14, 411/- beyond the period of 30 days. Default in payment of Central Excise duty continued in month of June 2007 to July 2007. In both the instances duty was paid on 19/9/2007 and 15/10/2007 respectively i.e. after lapse of more than 30 days. Therefore appellants were suo-moto required to pay duty on consignment wise as per the provisions subject to sub-rule (3A) of Rule 8 of Central Excise Rules, 2002. Since the appellant failed to comply with sub-rule (3A) of Rule 8 of Central Excise Rules, 2002. The goods cleared during the month of July and August, 2007 involving duty of Rs.6,87,714/-and 5,64,855/- respectively are held to be cleared without payment of duty and liable for confiscation and appellants are liable for imposition of penalty as proposed in the show cause notices dated 30/9/2008. The show cause notices were adjudicated by adjudication order dated 24/9/2010 wherein following order was passed.

(i) I confirm the duty amounting to Rs.6,87,714/- and Rs.5,64,855/- being the total Cenvat duty including Edn. Cess and Secondary and Higher Secondary Edn. Cess for the month of July, 2007 and August 2007 respectively under Section 11A(2) of the Central Excise Act, 1944. Since, the assessee has paid the same on 15/10/2007 and 20/10/2007 respectively, I appropriate the same against the confirmed duty defaulted amounts as stated above.

(ii) I also confirm the interest liability amounting to Rs.22,022/- and Rs.14,179/- for the month of July, 2007 and August, 2007 respectively under Section 11AB of the Central Excise Act, 1944. Since the assessee has paid the same on 15/10/2007 and 20/10/2007 respectively, I appropriate the same against the confirmed interest liability.

(iii) I impose penalty of Rs.6,87,714/- and 5,64,855/- (Total of Rs.12,52,569) on them under the provisions of Rule 25(1) (a) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 provided that the benefit of reduced penalty as per proviso 2 to Section 11AC of the Central Excise Act, 1944 shall be available to the assessee if the amount of penalty so determined is paid within the period of thirty days from the communication of this order.

Aggrieved by the said order the appellant filed appeal before the Commissioner (Appeals), who upheld the order of the adjudicating authority and rejected the appeal of the appellant, hence the appellant is before me. In the present appeal, appellant is contesting only imposition of penalty under Section 11AC, as appellant has admittedly paid the duty amount alongwith interest before the issuance of show cause notice.

3. Shri. Bharat Raichandani, Ld. Counsel for the appellant submits that in the present case, the issue is only delay in payment of monthly excise duty, which has been paid alongwith interest before issuance of show cause notice. The departments case is that since, during the defaulted period the appellant was required to pay all duty on consignment basis and they have not paid on consignment basis, duty was paid on monthly basis, therefore they are liable for penalty under Rule 25 read with Section 11AC. It is his submission that there is delay in monthly duty payment but duty alongwith interest was paid voluntarily and the same was intimated to the department. The department issued show cause notice only on the intimation given by the appellant and it was not detected by the department, therefore their case is squarely covered under sub section (2B) of Section 11A of Central Excise Act, 1944, according to which if any duty which is short paid, not paid is paid suo moto alongwith interest without any contest no show cause notice should be issued. The Appellant declared in their monthly ER-1 return as well as appellant has intimated regarding payment separately vide their letter dated 20 Oct 2007. In this case department should not issue show cause notice. Since show cause should not have been issued, no question of imposition of penalty arises. He further submits that since all clearances were made under cover of duty paying invoices and the clearances were declared in ER-1 return, there is no malafide and suppression on the part of the appellant. This is only a case of delay in making payment of duty, details of which are disclosed to the department therefore penalty under Section 11AC should not have been imposed.

4. Shri. N. N. Prabhudesai, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that as per Rule 8 of Central Excise Rules, 2002, it is statutory provision that if assessee fails to pay duty within due date and if it is paid belatedly beyond the 30 days from the due date, then the clearances will be treated as without payment of duty and consequences such as fine and penalty will follow accordingly penalty under Section 11AC read with Rule 25 required to be imposed. He placed reliance on the following judgments:-

(a) CCE, Chennai-II Vs. Mefco Engineers (P) Ltd. [2015(317) ELT 461(Mad)]

(b) Commr. of C. Ex. & Cus., Aurangabad Vs. R.R. Omerbhay Pvt. Ltd.[2011(269) ELT 46(Bom)] He submits that in view of the above judgments, Ld. Commissioner (Appeals) has correctly imposed penalty under Section 11AC, the same require to be maintained and appeal of the appellant is liable to be dismissed.

5. I have carefully considered the submissions made by both sides and perused the record.

6. The appellant admittedly delayed in making monthly payment of duty beyond the period of 30 days; however they have paid duty alonwith interest. The details of the clearances and payment of duty alongwith interest have been declared by the appellant in their monthly ER1 return. It is also noted that for the entire defaulted period appellant have been paying the duty from PLA and not from Cenvat Account. Since the duty which was proposed in the show cause notice and confirmed in the adjudication order had been paid by the appellant alongwith interest before issuance of show cause notice and department came to know about this discrepancy only from the appellants ER-1 return and the appellant also intimated to the department separately vide latter dated 20/10/2007. In my considered view, applicants case is squarely covered by sub section (2B) of Section 11AC which is reproduced below:

(2B) Where any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by the a Central Excise Officer before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid:

In view of the above sub section (2B) of Section 11AC, if there is short payment or non payment of duty and the assessee pays duty on the basis of his own ascertainment before serving of notice on him and inform the Central Excise officers of such demand in writing, the department should not serve any notice under Section 11A. From the fact of the case that duty, which was not paid within stipulated time period, has been paid by the appellant on their own alongwith interest and the same has been declared in ER-1 return and informed separately vide letter dated 20/10/2007. The case of the appellant is squarely covered under sub section (2B) of Section 11AC. In view of this position, the department should not have issued any show cause notice on the appellant, consequently no penalty should not have been imposed either under Section 11AC or any other rule. As regard judgments relied upon the by the Ld. A.R. in case of Mefco Engineers (P) Ltd and R.R. Omerbhay Pvt. Ltd (supra) I find that in both the cases facts were, that the goods were cleared clandestinely without payment of duty, whereas fact of the present case is the goods cleared under cover of invoices. Therefore it is not a case of clandestine removal of goods; it is a case of delay in monthly payment of duty. Both the judgments are not applicable in the facts of the present case. In view of this position, I am of the considered view that lower authority neither should have issued any show cause notice nor should have imposed penalty. Therefore, impugned order is not maintainable and hence the same is set aside. The appeal is allowed.

(Operative order pronounced in court)

Ramesh Nair Member (Judicial)

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