2023 (12) TMI 40 - AT - Central Excise

Appeal Reduces Duty Demand and Lowers Penalty; Appellant Has Deadline to Pay Reduced Penalty by 31.12.2023.

The appeal resulted in a reduction of the duty demand from Rs.2,39,986 to Rs.1,08,182 by the Commissioner (Appeals), who found no need for further ... Reduction in demand - receipt of defective goods from their suppliers and non-issuance of invoices at the time of sending the goods for replacement - HELD THAT:- The Commissioner (appeals) has already considered all the disparities pointed out by the Appellant and reduced the demand from Rs. 2,39,986/- to Rs.108,182. The valuation aspect raised by the Appellant has been dealt with by the Commissioner (Appeals) and the Appellant submits that there is no dispute of valuation now. Thus, it is observed that the Ld. Commissioner (Appeals) has already dealt with all the issues in the impugned order and there is no infirmity in the impugned order for interference. Accordingly, the demand of duty confirmed in the impugned order is upheld. Penalty - HELD THAT:- The Appellant is entitled for the reduced penalty of 25% of the duty confirmed. Accordingly, if the Appellant pays the demand of duty confirmed in the impugned order along with interest on or before 31.12.2023, they are entitled for the reduced penalty of 25% of the demand confirmed. If they do not comply with the payment, the penalty of Rs.1,08,182/- will stand. Appeal disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the demand for duty on goods allegedly removed without payment of duty after availing CENVAT credit is sustainable in view of the discrepancies in supporting documents and the appellant's challenges to quantities and valuation. 2. Whether the Commissioner (Appeals) properly exercised appellate scrutiny in accepting certain discrepancies and recalculating the duty demand accordingly. 3. Whether the appellant is entitled to reduction of penalty and, if so, on what conditions and quantum. ISSUE-WISE DETAILED ANALYSIS Issue 1: Sustainability of the duty demand for goods removed without payment of duty after availing CENVAT credit Legal framework: The proceedings arise from an assessment/demand for duty where goods were alleged to have been removed without payment of duty after availing CENVAT credit; the adjudicatory process involved issuance of a show cause notice, confirmation of duty and penalty in original adjudication, and appellate revision. Precedent Treatment: No prior judicial authorities or precedents were invoked or considered in the impugned order or the Tribunal's order reproduced in the record. Interpretation and reasoning: The Commissioner (Appeals) examined the appellant's submissions and documentary material (working sheet and road challans). The Commissioner (Appeals) accepted the appellant's challenge to specific additions in the adjudicating authority's Annexure (disparities in numbers for certain picture tubes) and excluded those figures from the computation. The Commissioner (Appeals) retained the rest of the Annexure calculations because the appellant did not dispute the valuation used; thus the valuation figures were treated as accepted. The Tribunal observed that the Commissioner (Appeals) had 'already considered all the disparities pointed out by the Appellant' and that the appellant no longer disputed valuation. Ratio vs. Obiter: Ratio - the demand is sustainable to the extent that it is supported by accepted figures and undisputed valuation; where specific item counts were successfully disputed and lacked supporting basis, those items were excluded from the demand. Obiter - none additional on evidentiary standards beyond application to the facts. Conclusions: The Tribunal upheld the reduced duty demand as computed by the Commissioner (Appeals), finding no infirmity in the appellate order's treatment of discrepancies and valuation. The duty demand confirmed in the impugned order is sustained. Issue 2: Adequacy of appellate scrutiny and acceptance of documentary discrepancies Legal framework: Appellate authority's duty is to re-examine the evidence and computations of the original adjudicating authority and to modify demand where the original computation is unsupported by documents or is otherwise erroneous. Precedent Treatment: No precedents cited or applied. Interpretation and reasoning: The Commissioner (Appeals) scrutinized annexures and working sheets provided by the appellant and specifically accepted that there was 'no supporting documents for adding' certain quantities in Annexure-A2. By amending Annexure-A1 and providing an adjusted table reflecting accepted quantities and values, the Commissioner (Appeals) demonstrated itemized appellate consideration rather than blanket reversal or affirmation. The Tribunal endorsed this approach, noting that the appellate authority 'has already dealt with all the issues in the impugned order.' Ratio vs. Obiter: Ratio - where an appellant successfully demonstrates lack of documentary basis for specific additions, the appellate authority may exclude those additions and recompute demand; such targeted scrutiny is sufficient to remedy over-assessment. Obiter - none beyond the factual application. Conclusions: The appellate scrutiny was adequate and properly resulted in modification of the demand. The Tribunal found no grounds to interfere with the Commissioner (Appeals)'s fact-specific adjustments. Issue 3: Entitlement to reduction of penalty and conditionality of reduced penalty Legal framework: Post-adjudication, penalty may be reduced by the authority on specified grounds; the Tribunal applied a conditional reduction mechanism linked to prompt payment of the confirmed duty and interest. Precedent Treatment: No precedents cited or applied regarding penalty reduction. Interpretation and reasoning: The Tribunal held that the appellant is entitled to a reduced penalty of 25% of the duty confirmed, conditional upon payment of the demand (duty plus interest) by a specified date (on or before 31.12.2023). The Tribunal expressly provided that failure to pay by that date will result in the penalty reverting to the full amount (Rs.1,08,182/- as stated). This operates as an incentive-linked mitigation rather than an unconditional waiver. Ratio vs. Obiter: Ratio - penalty may be mitigated to 25% of the confirmed duty where the appellant pays the duty and interest by the specified deadline; non-compliance restores the full penalty. Obiter - procedural or equitable considerations underpinning the choice of 25% but not elaborated in reasoning. Conclusions: The Tribunal upheld the conditional reduction of penalty to 25% subject to timely payment of duty and interest; non-compliance will result in imposition of the original penalty amount. Cross-References and Integrated Conclusions 1. The Tribunal's upholding of the amended duty demand is directly linked to the Commissioner (Appeals)'s factual findings excluding unsupported additions and accepting undisputed valuation; see Issue 1 and Issue 2 above. 2. The penalty conclusion (Issue 3) is contingent on the appellant's compliance with the duty payment affirmed under Issue 1; the Tribunal's order integrates assessment outcome and penalty mitigation into a single operative directive.