M/S. Liquid Metal Furniture Pvt. Ltd vs Cce, Bangalore-Ii

[Arising out of Order-in-Appeal No. 461/2008 dated 26/12/2008 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?

CCE, Bangalore-II

M/s. Liquid Metal Furniture Pvt. Ltd. Appellant(s)

Versus

M/s. Liquid Metal Furniture Pvt. Ltd.

CCE, Bangalore-II

Respondent(s)

Appearance:

Shri Girish K., Chartered Accountant For the assessee

Shri A.K. Nigam, Addl. Commissioner(AR) Shri S. Teli, Deputy Commissioner(AR) For the Revenue

Date of Hearing: 13/02/2015

Date of Decision: 

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. / 2015

Per : ARCHANA WADHWA

Being aggrieved with the impugned order of Commissioner(Appeals) vide which he has set aside the penalty imposed on the assessee, Revenue has filed the present appeal. I have heard Shri A.K. Nigam, Addl. Commissioner(AR) and Shri S. Teli, Deputy Commissioner(AR) appearing for the Revenue and Shri Girish K, Chartered Accountant appearing for the assessee.

2. As per the facts on record, the assessee was engaged in the manufacture of modular workstations falling under chapter 94 of the Central Excise Tariff Act and were availing the SSI exemption in terms of Notification No.8/2003 dt. 01/03/2003, which granted unconditional exemption to the extent of first clearance of Rs.1 crore. Based upon intelligence that the assessee has crossed the SSI exemption limit during November 2005, the Revenue booked an offence case against them in January 2007 and conducted investigations. It was found that the appellant had, during the financial year 2005-06, cleared excisable goods to the extent of Rs.1.48 crores and as such were liable to pay duty on the excess clearances. Show-cause notice was issued on 30/01/2008 proposing confirmation of duty along with interest and imposition of penalties. The said show-cause notice stand adjudicated by the original adjudicating authority.

3. The respondents filed an appeal before the Commissioner(Appeals) challenging the imposition of penalty upon them by submitting that the duty was paid by them on their own on 18/01/2007 along with interest. In such a scenario, there was no legal liability to impose any penalty upon them.

4. The Commissioner(Appeals) took note of the respondents letter dt. 10/01/2007 addressed by them to the Additional Commissioner disclosing the information that the duty stands deposited by them along with interest. Accordingly he observed that the show-cause notice should not have been issued to them in terms of the provisions of Section 11(2). There is no evidence on record indicating that the investigations were started by the Department before the said letter dt. 10/01/2007 wherein the facts were disclosed by the assessee themselves. Accordingly he set aside the penalty imposed upon the respondent. However the penalties imposed upon the Managing Director and employee of the firm under Rule 25 and 26 were upheld.

5. Being aggrieved with the said order, Revenue has filed the present appeal.

6. The only ground of appeal by the Revenue is that the assessee has not denied the fact of exceeding the exemption limit and their liability to pay the duty. As such the demand is sustainable under Section 11A(1) of the Central Excise Act and imposition of equal penalty under Section 11AC is mandatory.

7. I find that in the ground of appeal, Revenue has not challenged the reasoning advanced by Commissioner(Appeals) and has not rebutted the said findings. The appellate authority has set aside the penalty on the respondent on the ground that as per their letter dt. 10/01/2007, it was the respondent himself who disclosed all the facts and subsequently deposited the duty. As per the order of the appellate authority, Revenue has not placed any evidence on record to indicate that it was as a result of investigations that the assessees lapse came on record. In the present appeal also, the Revenue has not referred to any evidence to show such an action on the part of the Revenue. The assessee having deposited the entire duty along with interest prior to the issuance of the show-cause notice, cannot be said to have not paid the said duty by way of any malafide intention. In fact in such a scenario, the provisions of Section 11(2) provide that no show-cause notice should be issued to the assessee. As such, I find no infirmity in the view of the Commissioner(Appeals).

8. The Honble Chhattisgarh High Court in the case of Jaiswal Steel Processing Vs. CCE [2014(306) ELT 149 (Chhattisgarh)] has set aside the penalty imposed under Section 11AC in similar circumstances by observing that for invocation of provisions of Section 11AC, intention of the assessee to evade payment of duty is pre-requisite. In the absence of any evidence produced by the Revenue that such short payment or non-payment was with an intention to evade payment of duty, the imposition of penalty under Section 11AC was not warranted.

9. As I have already held that there was no malafide intention on the part of the assessee inasmuch as the assessee has himself detected the mistake and has deposited the differential duty along with interest much before the issuance of the show-cause notice, the imposition of penalty of Rs.10,000/- in terms of the provisions of Rule 25 of Central Excise Rules, which stands upheld by the Commissioner(Appeals) is not justified. The same is accordingly set aside.

10. In view of the foregoing discussion, the Revenues appeal is rejected and assessees appeal is allowed.

(Pronounced on ..)

ARCHANA WADHWA JUDICIAL MEMBER

Raja.

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