2017 (12) TMI 213 - AT - Central Excise

Tribunal Overturns Penalties, Allows Additional Evidence, Refutes Allegations

The Tribunal set aside the penalty imposed under rule 15 of the CCR 2004 as the duty amount with interest was paid before the Show Cause Notice issuance. ... Benefit under N/N. 6/2002-CE dated 01.03.2002 - certificates produced by the appellant from the District Collector to avail the above exemption notification - clandestine removal - Held that: - The benefit of the notification cannot be denied only for the reason that the certificates are not in the proper format - In those cases where the appellant has failed to produce the certificate from the District Collector, the duty will have to be paid along with interest - matter requires reexamination. Clandestine removal - Department noticed that in the internal payment slips found in the appellants records, lower payment was shown as compared to the rate mentioned in the corresponding invoices - Held that: - the invoiced quantity have been found to be more than the quantities recorded in the internal payment slips. Hence we are inclined to accept the appellant’s argument that more duty has been paid in those cases. In any case the Department has not placed on record any evidence to substantiate the charge of clandestine clearance - demand set aside. Penalty u/r 26 on Sh. J.D. Gupta, MD - Held that: - there is no specific allegation has been made out in the SCN against the MD - there is no justification on imposing penalty against appellant - penalty set aside. Appeal allowed in part and part matter on remand. Issues involved:1. Imposition of penalty under rule 15 of the CCR 2004 for reversal of duty amount.2. Availment of benefit under notification No. 6/2002 - production of certificates from District Collector.3. Discrepancy in invoiced quantity and internal payment slips leading to allegations of clandestine clearance.4. Penalty imposed on the Managing Director (MD) under rule 26.Issue 1: Imposition of penalty under rule 15 of the CCR 2004 for reversal of duty amount:The appellant had availed Cenvat credit and faced a demand for reversal of duty amount under rule 6(3) of the CCR 2004. Despite rectifying the reversal discrepancy, a penalty was imposed. The Tribunal noted that if the disputed duty amount along with interest is paid before the issue of Show Cause Notice (SCN), no penalty shall be imposed as per section 11A(2B) of the Central Excise Act, 1944. Since the duty with interest was paid before the SCN, the penalty imposition was deemed unjustified and set aside.Issue 2: Availment of benefit under notification No. 6/2002 - production of certificates from District Collector:Regarding the benefit under notification No. 6/2002, the appellant was required to produce certificates from the District Collector. Disputes arose as some certificates were not produced or were not in the prescribed format. The Tribunal directed the matter to be sent back to the adjudicating authority. It ruled that where certificates were missing, duty with interest must be paid. However, if certificates were issued by the District Collector in a different format from the later prescribed one, the authority should examine if essential details for benefit extension were present. Denying benefit solely based on format discrepancies was deemed improper, allowing for additional evidence in the proceedings.Issue 3: Discrepancy in invoiced quantity and internal payment slips leading to allegations of clandestine clearance:The Department alleged clandestine clearance based on discrepancies between invoiced quantity and internal payment slips. The appellant argued that duty had been paid on the higher invoiced quantity, refuting the demand. The Tribunal found that invoiced quantities exceeded those in payment slips, accepting the appellant's argument of higher duty payment. No evidence was presented to support the charge of clandestine clearance, leading to the demand being set aside.Issue 4: Penalty imposed on the Managing Director (MD) under rule 26:The MD challenged the penalty imposed under rule 26. The Tribunal observed that no specific allegations were made against the MD in the SCN. As there was no justification for imposing a penalty on the appellant, the penalty on the MD was also set aside.In conclusion, the Tribunal modified the impugned order, remanding the case to the adjudicating authority solely for addressing the denial of benefit under notification number 6/2002. The penalties imposed were set aside based on the legal considerations and lack of substantiated allegations.