M/S. Neha Confectionery Pvt. Ltd vs Commr. Of Central Excise, Kolkata-Vii

(Arising out of the Order-in-Appeal No.37/Kol-VII/2011 dated-22/02/2011 passed by the Commissioner of Central Excise, (Appeal-I), Kolkata)

For approval and signature of:

DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

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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 ?

M/s. Neha Confectionery Pvt. Ltd. APPELLANT(S) VERSUS Commr. of Central Excise, Kolkata-VII RESPONDENT(S) APPEARANCE

Sri S.P. Siddhanta, Consultant . FOR APPELLANT(S) Sri M. Chattopadhya, A.C., (A.R. ) FOR THE RESPONDENT(S) CORAM: DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

DATE OF HEARING: 19/06/2015

Date of Pronouncement: 14/08/2015

ORDER NOFO/A/75430/2015

Per DR. D.M. MISRA Heard both sides.

This is an appeal filed against Order-in-Appeal No.37/Kol-VII/2011 dated-22/02/2011.

2. The Ld. Commissioner (Appeals) has confirmed imposition of penalty under Section 11AC of CEA,1944 after observing that the appellant did not contest the duty and interest before him and he did not proceed to consider the issue on merit of the case.

3. The Ld. Consultant Shri Siddhanta, submitted that in the present appeal, however, they have challenged the impugned order both on merits as well as against confirmation of penalty under Section 11AC of CEA, 1944.

4. Ld. A.R. for the Revenue vehemently opposed the said submission on the ground that since the appellant had not disputed the case on merit before the Ld. Commissioner(Appeals) and confined their argument in assailing imposition of penalty, hence they cannot be allowed to agitate the said issue before this forum.

5. To ascertain the said fact, the record of personal hearing before the Ld. Commissioner (Appeals) was directed to be placed. From the said record it is noticed that The Ld Commissioner(Appeals) in the record of personal hearing observed as under:

Appellant filed written submission. He did not contest duty liability but under the circumstances, requested to set aside the penalty.

6. From the aforesaid memo of personal hearing, signed by both sides, it is clear that the appellant had not disputed the appeal on merit but confined their argument and contested the imposition of penalty only. Therefore, challenging the correctness of demand and interest at this stage, in my view, is not permissible.

7. On the issue of penalty, the Ld. Consultant submitted that the applicant had by mistake availed CENVAT Credit on inputs utilized in the manufacture of biscuits which were dutiable and also exempted where ever the retail sale price was below Rs.50/-. Consequently, they were required to pay 10% of the price of biscuits i.e. Rs.68,605/- as per rule 6(3) of CENVAT Credit Rules, 2004.The second issue relates to non-reversal of CENVAT Credit of Rs.1,63,499/- and education cess of Rs.3,270/- when they had opted out of MODVAT Scheme at the beginning of the financial year. It is his submission that on being pointed out, the entire amount of Rs.2,35,754/- was paid alongwith interest of Rs.7,645/-. It is his submission that, therefore, penalty under Section 11AC of CEA,1944 is unwarranted and unjustified.

8. Ld. A.R. for the Revenue reiterated the findings of the Ld. Commissioner (Appeals).

9. I find that the appellant had initially not paid 10% of the price of exempted biscuits and also not reversed the CENVAT Credit when opted out of the CENVAT Credit as on 01.04.2007 which has resulted non payment of the liability of Rs.2,35,274/-. The said amount has been paid along with interest of Rs.7645/- by the appellant on 03.11.2007 when pointed out by the Department accepting their mistake of short payment of the said amount. Show Cause Notice was issued to them on 22.01.2009 demanding the said amount and proposing penalty under Sec. 11AC of CEA,1944 read with Rule 15 of CENVAT Credit Rules,2004. On going through the impugned notice, I do not find any allegation has been made out bringing out the facts of suppression, mis-declaration etc. On the contrary, it is acknowledged that soon after the mistakes were pointed out, the appellant had voluntarily discharged the deficit amount along with interest.

10. I find that both the authorities below had laid down stress on the point that mere payment of amount outstanding dues, would not absolve the appellant from imposition of penalty but failed to discuss the circumstances under which the appellant could be said to have suppressed the facts warranting imposition of penalty under Section 11AC of CEA,1944 and Rule 15 of CCR,2004. The Ld. Commissioner(Appeals) observation that had the department not pointed out the discrepancy the deficit amount would not have been paid, is an inference not supported by allegation in the notice nor any evidence leading to the conclusion that the Appellant had suppressed the facts. In these circumstances, penalty imposed under Section 11AC of the Central Excise Act read with Rule 15 of CCR,2004 is unsustainable. Consequently, the impugned Order-in-Appeal is set aside to the extent of confirmation of penalty. Appeal disposed off as above.

( pronounced in the court on 14/08/2015)

Sd/-14/08/15 ( DR. D.M. MISRA) MEMBER (JUDICIAL) k.b/-

Excise Appeal No. E/393/2011

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