TaxTMI 
TaxTMI 
2026 (7) TMI 1347
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....vat Credit Rules, 2004 and were filing ER- 1 returns. The Anti-evasion wing of Central Excise at HQ Bhavnagar carried out simultaneous searches at office premises of the appellant K B Ispat Pvt Ltd and residential premises of the Director of the company Shri Hemant R Vora and factory premises of the company. On the basis of the information that the appellant company was engaged in evasion of Central Excise duty by way of utilizing single Central Excise duty payment challan more than one time for payment of Central Excise duty liabilities in more than one month. It was also gathered that the appellant company was procuring raw materials from local market without cover of invoices and without accounting for same in their financial / statutory records. The search resulted into seizure of incriminating documents under panchnamas dated 22.02.2018. 1.3 The scrutiny of records seized during the search operation revealed that the appellant company had utilized Central Excise duty payment Challan No. 00022880909201600319 dated 09.09.2016 for Rs. 8,00,000/- for payment of their Central Excise duty liability for the month of August-2016. They have deliberately utilized the same Challan of ....
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....s Swachha Bharat Cess, credit of which was not admissible to them either under PLA or under Cenvat Credit Register and appeared to be recovered from the Appellant company, hence the said amount of Swachha Bharat Cess was according to the department recoverable under the proviso to Section 11A of the Central Excise Act, 1944 and rules made thereunder. 1.5 These facts were noticed by Jurisdictional Range Superintendent during the course of scrutiny of ER-1 returns and the same was communicated to the Appellant company for payment of Central Excise duty along with applicable interest and penalty but the appellant company failed to comply with. Thus according to the department total Central Excise duty to the tune of Rs. 27,19,520/- was liable to be recovered from the Appellant no. 1 along with interest and penalty. 1.6 A statement of Shri Hemant R Vora Director of the appellant company was recorded. From his statement, it emerged that the Appellant company, after initiation of inquiry by the department, has paid total Rs. 27,00,000/- as Central Excise duty liabilities, total Rs. 3,42,913/- as interest amount and total Rs.2,72,000/- as penalty. During investigation, it was also r....
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....so ordered to recover interest on the amount mentioned above but as the appellant company had paid the interest amount of Rs. 3,82,913/-, it was ordered to be appropriated against their interest liability. The Adjudicating Authority also ordered to recover Central Excise duty of Rs. 1,65,000/- from appellant company on Billets and also ordered to recover interest on this amount. The Adjudicating Authority dropped the proposal of demand of Rs. 25,57,455/- imposed on the Appellant company for wrong availment of Cenvat Credit of 2% Education Cess and 1% Secondary & Higher Education Cess. Adjudicating Authority also ordered to recover wrong availment of credit of Swachha Bharat Cess of Rs. 19,520/- along with interest and also imposed penalty of Rs. 28,84,520/- under Section 11AC of Central Excise Act on the Appellant company. The Adjudicating Authority also imposed penalty of Rs. 19,520/- on the appellant company under Rule 15 of Cenvat Credit Rules, 2004 and also imposed penalty of Rs. 28,65,000/- on Appellant Shri Hemant R. Vora under Rule 26 of Central Excise Rules, 2002. 1.8 Being aggrieved from the Order-in-Original, the Appellant company filed appeal before the Commissioner b....
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....nd all proceedings in respect shall be deemed to be concluded. Therefore, in view of the provisions of Section 11AC (1) (a) proviso, no penalty was payable by the appellant as entire amount of duty with interest was paid well before the issue of the Show Cause Notice. Further 10% penalty was also paid by the appellant. Therefore, no further amount of interest and penalty is payable by the appellant and the order demanding interest and penalty equal to the said Central Excise duty is liable to be set aside. 2.4 The learned Counsel for the appellant also submitted that when the appellant company is not liable to pay any penalty in view of the proviso to Section 11AC (1) (a) of the Central Excise Act, 1944 and all the proceedings in respect of duty and interest shall be deemed to be concluded, therefore, penalty equal to Central Excise duty imposed upon the Director may also be considered as deemed concluded because penalty is imposed under Rule 26 of Cenvat Credit Rules, 2002 for alleged short payment of duty of excise only and it is not the case of the Revenue that the appellant Shri Hemant R Vora had dealt with the goods in the manner stated in Rule 26 that too with reason to be....
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....d the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) must be set aside and appeals may be allowed 3. The learned AR has reiterated the impugned order and submitted that the appellant has deliberately evaded excise duty and manipulated the challans. It has been clearly held in the impugned Order-in-Appeal that the conduct of the appellant constitute fraud, wilful mis-statement and suppression of facts with intent to evade duty and therefore, extended period of five years has been rightly invoked. The learned AR also submitted that subsequent payment of Rs. 27,00,000/- as C.E. duty, 3,42,913/- interest and Rs. 2,72,000/- penalty during investigation only confirms the liability and appropriation but does not wipe out the offence after issuance of Show Cause Notice, where ingredients of Section 11A (4) are satisfied. 3.1 The learned AR also submitted that appellant has relied upon pre amendment Section 11A (2B) / 11A(6) and on the case law where Show Cause Notice was held unnecessary after voluntary payment which is misplaced because Section 11AC was comprehensively amended in 2015 and the present case involved admitted fraud and falsification of statutory ....
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....ases (1) The amount of penalty for non-levy or short-levy or non-payment or short-payment or erroneous refund shall be as follows:- (a) where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, for any reason other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (10) of section IIA shall also be liable to pay a penalty not exceeding ten per cent. of the duty so determined or rupees five thousand, whichever is higher: PROVIDED that where such duty and interest payable under section 11AA is paid either before the issue of show cause notice or within thirty days of issue of show cause notice, no penalty shall be payable by the person liable to pay duty or the person who has paid the duty and all proceedings in respect of said duty and interest shall be deemed to be concluded..." 4.4 From the perusal of the proviso to Section 11AC(1)(a) as mentioned above, it is clear ....
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....re within the knowledge of the department about short paid Central Excise duty. Such cases are as follows:- (a) Nizam Sugar Factory vs. Collector of Central Excise, A.P. 2006 (197) ELT 467 (SC) (b) ECE Industries Limited vs. Commissioner of Central Excise, New Delhi - 2004 (164) ELT 236 (SC) (c) Gujarat Ambuja Exports Ltd vs. Union of India - 2012 (26) STR 165 (Guj) (d) Commissioner of Central Excise & Customs Vs. Rivaa Textiles Inds. Ltd - 2015 (322) ELT 90 (Guj.) 4.8 In the present case, the facts regarding short paid Central Excise duty were within the knowledge of the department, which is clear from the three letters issued by the Jurisdictional Superintendent dated 02.11.2017, 21.02.2018 and 21.02.2018, therefore, proceedings in this regard shall be deemed to be concluded. 4.9 I also agree with the arguments furnished by the appellant that demand of Central Excise duty of Rs. 1,65,000/-, confirmed on the ingots which can be manufactured out of unaccounted raw materials in question, along with interest and equal penalty is also not sustainable because duty of excise is leviable on manufacture and payable at the time of clearance of the ....