2010 (3) TMI 431 - AT - Central Excise

Tribunal upholds decision on reduced penalty, finding no intent to evade duty payment.

The Tribunal upheld the decision to reject the Revenue's appeal against the reduced penalty imposed by the Commissioner (Appeals). It concluded that there ... Penalty- Intent to evade- the respondent’s premises were visited by officers of department and during the scrutiny of records as well as the stock Dosition, it was revealed that differential payment of duty, wrongly availed credit and shortage of finished goods. Appellant stating that credit taken on Xerox copy of invoice as original copy with Accounts Department and credit taken when received later and further state that goods very small in size and lying in back area and clandestine removal not alleged for shortage of finished goods. Held that- discrepancies not explained but intention to evade payment of duty absent. Impugned order reducing penalty sustainable. Issues:- Appeal against dropping of penalty by the Commissioner (Appeals) under Section 11AC- Failure to consider amortization cost in determining assessable value- Availing inadmissible Cenvat credit based on Xerox copy of invoice- Shortage in finished goods stockAnalysis:Issue 1: Appeal against dropping of penalty by the Commissioner (Appeals) under Section 11ACThe appeal was filed by the Revenue challenging the reduction of penalty by the Commissioner (Appeals) in a case involving the manufacturing of excisable goods. The Revenue contended that the duty was confirmed, making the assessee liable for the penalty under Section 11AC for contravening Central Excise Act provisions. The Revenue argued that the respondent suppressed facts regarding amortization cost, inadmissible Cenvat credit, and shortage in finished goods, indicating an intention to evade duty payment. The Revenue relied on various legal precedents to support its position.Issue 2: Failure to consider amortization cost in determining assessable valueDuring the investigation, it was found that the respondent failed to include the amortization cost while determining the assessable value of goods received free of cost from another entity. The respondent argued that they paid duty when the amortization cost was made known to them, making the case revenue neutral with no intention to evade duty payment. The respondent also explained that the original invoice was initially unavailable, leading to the use of Xerox copies for Cenvat credit, which was rectified promptly upon obtaining the original invoice.Issue 3: Availing inadmissible Cenvat credit based on Xerox copy of invoiceThe respondent availed Cenvat credit based on Xerox copies of invoices due to the unavailability of original copies, which were later reconciled when the original invoices were retrieved. The respondent emphasized that this was not a deliberate attempt to take credit improperly, as the original copies were temporarily with the accounts department.Issue 4: Shortage in finished goods stockRegarding the shortage in finished goods stock, the respondent explained that the small-sized goods were stored in a back area, with no evidence of clandestine removal. The respondent highlighted that no panchanama was drawn for the shortages, indicating no intention to evade duty payment. The Tribunal, after examining the submissions and records, concluded that there was no intention on the part of the respondent to evade duty payment, leading to the rejection of the Revenue's appeal against the reduced penalty imposed by the Commissioner (Appeals). The Tribunal upheld the decision, emphasizing the absence of intent to evade duty despite discrepancies in record explanations.