N.S. Mahadeshwara, Partner Of Mikron ... vs Cce, Bangalore (Adjn.)

[Arising out of Order-in-Appeal No. 9 to 11/2009-CE dated 29/01/2009 passed by the Commissioner of Central Excise, Bangalore]

For approval and signature:

HON'BLE MRS. 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? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

N.S. Mahadeshwara, Partner of Mikron Tooling No. 2/205/B, 12th Main, III Phase, Peenya Industrial Area, Bangalore  560 058 Appellant(s)

A.R. Sridhar Managing Partner of Mikron Tooling No. 2/205/B, 12th Main, III Phase, Peenya Industrial Area, Bangalore  560 058 Appellant(s)

Commissioner of Central Excise, Service Tax And Customs Bangalore-II PB 5400 CR Building, Queens Road, Bangalore - 560 001 Appellant(s)

Mikron Tooling No. 2/205/B, 12th Main, III Phase, Peenya Industrial Area, Bangalore  560 058 Appellant(s)

Versus CCE, Bangalore (Adjn.) PB 5400 CR Building, Queens Road, Bangalore - 560 001 Respondent(s)

Micron Tooling No.2/205/B, 12th Main, III Phase, Peenya Industrial Area Bangalore  560 058 Karnataka Respondent(s)

Appearance:

Mr. Pradyumna G.H., Advocate No. 244, 1st Cross, Banashankari 3rd Stage, 2nd Block Bangalore  560 085 Karnataka For the Appellant

Mr. N. Jagdish, DR For the Respondent

Date of Hearing: 26/06/2015 Date of Decision: 26/06/2015 CORAM:

HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order Nos. 21495-21498 / 2015

All the four appeals, three appeals filed by the assesses and one filed by the Revenue are being disposed of by a common order as they arise out of the same impugned order passed by Commissioner (Appeals).

2. As per facts on record the appellant M/s. Micron Tooling was engaged in the manufacture of Tool Holders and Boring Bars. During the financial year 2006-07, he was availing the small scale exemption benefit in terms of Notification No. 8/2003-CE dated 01.03.2003, which granted total exemption to the first clearance of Rs. 1,00,00,000/- (Rupees One Crore only). However the appellant crossed the said exemption limit on 13.02.2007. However, without realizing that they have crossed the said exemption, they continued to clear their final product without payment of duty.

3. In the month of April 2007, when the appellant conducted the audit of their records, on their own, they realized that they have crossed the said exemption limit by Rs. 41.75 lakhs (Rupees Forty One Lakhs Seventy Five Thousand approximately). The said fact was intimated by them, on their own to the Revenue and the duty to the extent of Rs. 6,85,930/- (Rupees Six Lakhs Eighty Five Thousand Nine Hundred and Thirty only) was paid by them along with interest on 25.04.2007 itself. The said fact was reflected by them in the monthly return filed in May 2007.

4. On the above basis appellant was served with a show-cause notice on 27.02.2008 proposing imposition of penalties upon them in terms of Section 11AC and on the other two assessees being Managing Partner and Partner, for imposition of penalties under Rule 26 of Central Excise Rules. The original adjudicating authority imposed penalty to the extent of 100% of duty, in terms of Section 11AC. In addition he imposed penalty of Rs. 25,000/- (Rupees Twenty Five Thousand only) on the Mikron Tooling in terms of Rule 25. He also penalized the Managing Partner and Partner to the extent of Rs. 10,000/- (Rupees Ten Thousand only) and Rs. 5,000/- (Rupees Five Thousand only).

5. On an appeal against the above order, Commissioner (Appeals) took note of the fact that the said mistake was detected by the appellant himself and the duty was paid on his own, before any intervention of the Department. As such he concluded that inasmuch as there is nothing on record to suggest investigation or other measure by the Department before the date of disclosing facts by the appellant, imposition of penalty upon them under Section 11AC of Central Excise Act was not warranted. He accordingly set aside the same. However he upheld the penalties imposed under Rule 25 and Rule 26 on the present appellants, on the ground that they have admittedly contravened the provisions of the Central Excise Act.

6. The said impugned order of Commissioner (Appeals) is challenged by the appellants before the Tribunal. Revenue is also in appeal against that part of the impugned order vide which Commissioner (Appeals) set aside the penalty under Section 11AC.

7. I have heard both the sides duly represented by Mr. Pradyumna G.H, Advocate and Mr. N. Jagdish, DR. There is no dispute about the fact that the mistake of crossing the exemption limit of Rs. 1,00,00,000/- (Rupees One Crore only) was detected by the appellant himself and was informed to the Revenue. Duty was paid by him on his own, without any intervention by the Revenue within a period of one month from the date of detection and the said fact was reflected in the return filed in May 2007. As per the provisions of Section 11A(2B) of Central Excise Act where duties not levied are paid by an assessee on his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him, there will be no show-cause notice in terms of Section 11A(1). However as per the explanation attached to the said Section, the same is not applicable where the non-payment of duty or short payment of duty is on account of any willful misstatement or suppression of facts or contravention of any provisions with intent to evade payment of duty. As such it is the contention of the learned advocate that in terms of the said Section, no proceedings should have been initiated against them at all.

8. I find that there is no dispute about the fact that such short payment, which according to the appellant has occurred inadvertently, on account of non computation of the value of clearances, was detected by themselves only. The said fact of exceeding the exemption limit came to the notice of the appellant by way of their own audit. As such, in such a scenario, no malafide can be attributed to the assessee. The differential duty already stands deposited by the appellant immediately after the detection of the mistake, along with interest. The demand of interest is in the nature of a penal action. I fully agree with the learned advocate that in such a scenario no other proceedings should have been initiated against the appellant. The legislative intent for creation of the said sub-section is to avoid any futile litigation, which purpose stands defeated by the lower authorities by issuing show-cause notice to the appellant.

9. Having said so I set aside the impugned orders of the authorities below upholding the penalties imposed under Rule 25 and 26 of the Central Excise Rules. Inasmuch as penalties stand set aside, imposed in terms of the above Rule, no infirmity can be found for non-imposition of penalty under Section 11AC. Accordingly the Revenues appeal is required to be rejected.

10. In view of the above the appeals filed by the assessees are allowed and the appeal filed by the Revenue is rejected.

(Order pronounced in open court)

(ARCHANA WADHWA) JUDICIAL MEMBER

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