P.B. Vyas, Vidyut Metallics Pvt. Ltd. And Anr. vs Commissioner Of Central Excise, Mumbai III

Heard both sides and perused the records on the case.

The appellants herein have filed appeals against penalties imposed on them vide order-in-original dated 13.12.2010 issued against the appellants and main party i.e. Vidhyut Metallics Pvt. Ltd. The appeal (E/455/2011) filed by the main party has since been settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Learned counsel for the appellant submits that the issue involved in the case of valuation of excisable goods cleared by the assessee; the main party therein have discharged the excise duty on the goods cleared by them, to their other plants for job work for further processing, by adopting cost available for the previous financial year, Whereas the revenue sought to adopt the value based on 40% adhoc to available cost data.

Learned Counsel for the appellant further submits that provisions of Rule 26 cannot be invoked in the instant case as the appellants have no knowledge that the goods dealt with are liable to confiscation. The issue involved has been going on for several years and in previous proceedings, Learned Commissioner vide some orders for previous period has confirmed only demand with interest but specifically refrained from imposing penalty on the main appellant and/or other conoticees. He also relied upon Hon'ble Supreme Court decision in the case of SKF Ltd. 2009 (239) ELT 385 (SC).

Learned Authorised Representative for the department reiterates the finding of the order-in-original and submits that since the main appellant had accepted their lapse and have settled the case under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 the imposition of penalty against the appellant is justified. The appellants were also free to appeal under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Having not done so, they are liable to pay penalty that is imposed.

We find that the issue involved is valuation of excisable goods manufactured and cleared by the main appellant i.e. Vidyut Metallics Pvt. Ltd. We find that order-in-original records that since the actual cost of production of the said goods cleared to job workers during the period could be decided only on finalisation of the balance sheet of the year. The assessee worked out the cost of production during the said period on the basis of balance sheet for the previous year. On calculation of the actuals, the value declared by the appellant was lesser than the value actually calculated. However, Learned Commissioner find that the appellants could have opted for provisional assessment under Rule 7 of Central Excise Rules, 2002 and that cost of production of captively consumed goods should have been arrived in terms of Circular no. 692/8/2003-CE dated 13.02.2003 and thus the adjudicating authority has confirmed the duty demand and penalties.

We find that the issue is recurral and that periodical show cause notices have been issued and adjudicated. As claimed by the Learned Counsel for the appellant, the adjudicating authority did not impose any penalty in some cases for different period. We find that in respect of order-in-original no. 77- 79/COMMR/Mulund/AKP/2007-08 dated 31.03.2008, the Commissioner has held as under:

"20. As regards imposition of penalty, I find that there is no malafide intention on the part of the assessee in declaring a lower value at the time of clearance of the goods in as much they were not in a position to know the exact cost of production of goods as the same would be known after the finalisation of accounts for the year 2006-07. An assessee cannot be asked to do the impossible. Neither the department nor the assessee was in a position to indicate the correct value at the time of clearance of the goods. It is not the case of the department that the assessee had misdeclared the assessable value with an intention to evade payment of duty. Therefore, question of imposition of penalty does not arise under the facts and circumstances of the case."

In view of the above, that is, clear that the case is of recurring nature; different adjudicating authorities have taken different stand vis-à-vis imposition of penalties and no evidence of personal gain that would have accrued to the appellants has been brought out either in the show cause notice or the impugned order. We find that no case has been made by the department for imposition of penalty as against the appellant.

Moreover, insistence of payment of penalty by a co-noticee when the main party has settled the issue under Sabka Vishwas (Legacy Dispute Resolution) Scheme defeats the spirit of the scheme itself. When the issue is of recurring nature and periodical show cause notices were being issued and adjudicated, no malafides can be attributed to individuals and hence imposition of penalties is not justified.

In view of the above, the appeals are allowed.

(Pronounced in Court on 17.03.2021)