2019 (2) TMI 1555 - AT - Central Excise

Penalty under Central Excise Act set aside, appeal partially allowed, clear evidence crucial

M/s. Hindustan Petroleum Corporation Ltd. Versus Commissioner of Central Excise, Mumbai

The tribunal set aside the penalty imposition under section 11AC of the Central Excise Act 1944, partially allowing the appeal. The decision emphasized ... Demand of short paid duty alongwith Interest and penalty - extended period of limitation - Held that:- The liability to duty, of the additional consideration received on sale from the terminal is admittedly, not in dispute. It would appear that it was this peculiar circumstance that prompted the original authority to withhold scrutinising the contention of the appellant that extended period could be invoked only in the prescribed circumstances which applies to imposition of penalty also. The failure of the first appellate authority to do so does not appear to be reasonable. The show-cause notice, save for a passing reference to suppression, does not evidence any deliberate intent on the part of the assessee. The appellant, too appears to have been more concerned with pleading of revenue neutrality, implied in the discharge of the duty liability without demur, as more critical - in the absence of any finding that the evidence on record warranted the imposition of penalty, we set aside the impugned order to the extent that it has upheld the invoking of section 11AC of Central Excise Act 1944. Appeal allowed in part. Issues:1. Appellant challenging penalty imposition under Central Excise Act.2. Applicability of extended period for demand and penalty.3. Judicial decisions on liability for penalty in public sector units.4. Incorporation of additional grounds in appeal.5. Responsibility of public sector units for tax law compliance.Analysis:1. The appellant contested the penalty imposed under the Central Excise Act, focusing on the clearance of 'furnace oil' to their terminal for subsequent sale at a higher price, with the differential amount collected from customers. The demand, primarily for short payment under section 11A, was challenged as time-barred without sufficient evidence for invoking the extended period. The appeal solely addressed the penalty issue.2. The first appellate authority upheld the duty recovery based on judicial precedents like Commissioner of Central Excise v. Padamshree V Patil SSK Ltd and Commissioner of Central Excise v. Sterlite Optical Technologies Ltd. The appellant's attempt to introduce additional grounds through a Miscellaneous Application was dismissed by the tribunal.3. The Authorized Representative relied on tribunal decisions emphasizing the responsibility of public sector units for tax law compliance, citing cases like Chennai Port Trust v. Commissioner of Service Tax and Bharat Petroleum Corporation Ltd v. Commissioner of Central Excise. In contrast, the appellant cited a tribunal decision in their favor.4. The tribunal noted the undisputed duty liability on additional consideration from terminal sales but highlighted the absence of clear intent for penalty imposition. The original authority's failure to consider circumstances justifying the extended period for penalty imposition was deemed unreasonable. The tribunal set aside the penalty imposition under section 11AC of the Central Excise Act 1944, partially allowing the appeal.This judgment underscores the importance of evidence and justification for penalty imposition under the Central Excise Act, particularly in cases involving public sector units. It also highlights the significance of considering circumstances and compliance with tax laws in determining liability for penalties.