2013 (12) TMI 817 - HC - Central Excise

Court Upholds Penalty for Willful Duty Evasion

The Court upheld the Tribunal's decision regarding the larger period of limitation, emphasizing the appellant's intent to evade duty, leading to delayed ... Intention to evade payment of duty – Held that:- The appellant adopted a notional price in respect of consignment sales and they had admitted that there was some delay in receipt of sale patties from the consignment agents and the Director of the Company admitted the liability and accepted to pay the differential duty - as declared in the invoices that the removals specified in the notice are towards consignment agents, the responsibility of paying differential duty lies with the noticee - the appellant was conscious of the notional value for sale towards consignment agent, the responsibility of paying differential duty is rest on the appellant - appellant intentionally withheld payment of differential duty for the subsequent period which clearly established that there was willful intention to evade payment of duty. Leviability of penalty and interest – Held that:- Following Union of India vs. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - Payment of differential duty, whether before or after the show cause notice is issued, cannot alter the liability for penalty and the condition for which are clearly spelt out in Section 11AC of the Central Excise Act – Decided against Appellant. Issues:1. Larger period of limitation applicability2. Invoking larger period of limitation without fraud, suppression, or misrepresentation3. Levying penalty and interest when duty is paid before show cause notice4. Tribunal member taking a different view without following precedentsAnalysis:Issue 1: Larger period of limitation applicabilityThe appellant argued that the Tribunal was wrong in applying the larger period of limitation. However, the Court referred to the Supreme Court's decision in Union of India vs. Rajasthan Spinning & Weaving Mills, stating that the intention to evade payment of duty is crucial, irrespective of when the duty was paid. The Enforcement Wing's inspection revealed the appellant's notional pricing for consignment sales, leading to a delayed payment of differential duty. The Court upheld the Tribunal's decision regarding the larger period of limitation.Issue 2: Invoking larger period of limitation without fraud, suppression, or misrepresentationThe appellant contended that without fraud, suppression, or misrepresentation, the larger period of limitation should not apply. However, the Court emphasized that the deliberate intent to evade duty is the key factor. The appellant's failure to promptly pay the differential duty upon receiving sale patties indicated willful evasion, as confirmed by the Enforcement Wing's surprise inspection.Issue 3: Levying penalty and interest when duty is paid before show cause noticeThe appellant argued that paying duty before the show cause notice should exempt them from penalty and interest. Nevertheless, the Court cited the Supreme Court's ruling, clarifying that penalty under Section 11AC is a consequence of intentional deception to evade duty. The appellant's delayed payment despite being aware of the liability demonstrated a deliberate attempt to avoid duty payment.Issue 4: Tribunal member taking a different view without following precedentsThe appellant raised concerns about a Tribunal member diverging from established decisions. However, the Court found no reason to dispute the factual findings of the Appellate Authority and Tribunal. The judgment aligned with precedents and upheld the penalty imposed on the appellant.In conclusion, the Court dismissed the Civil Miscellaneous Appeal, emphasizing the appellant's willful evasion of duty and the applicability of penalty despite the timing of duty payment. The decision was in line with legal precedents and upheld the Tribunal's ruling.