Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case law/2014-15/2245

Whether shortage of inputs and clearance without payment of duty is invoked the provisions of sec 11AC.

Case:- COMMISSIONER OF C. EX., PUNE-II Vs. MAHALAXMI STEEL INDUSTRIES LTD.

Citation:- 2014(304) E.L.T. 136 (Tri. –Mumbai)

Brief facts:- The brief facts of the case are that during the course of investigation in the factory of the respondent, there was a shortage of 29.72 MT of MS ingots and 209 liters of furnace oil. It was also found that the appellant has cleared 36.18 MT of MS bar without issuance of invoice/ without payment of duty. It was also found that 1114 nos. of MS ingots were received by the respondents under delivery challans but the same had not been entered in their books of account. Therefore, proceedings were initiated against the respondents. As the respondents paid the duty on shortages of the inputs and also paid the duty on the clearances which were alleged without issuance of invoice/ without payment of duty, therefore the adjudicating authority demanded the interest and imposed equivalent amount of penalty on the respondent for violating the provisions of sections 11AC and 11AB of the act. The Commissioner (Appeals) dropped the demand of interest and penalty. Aggrieved by the said order, the revenue is before Tribunal.     

Appellant’s contentions:- The Learned AR submits that as the respondent has admitted their liability and during the course of investigation, shortages of inputs were found and the goods were cleared by them without payment of duty, therefore the intention of the respondent is very clear that they have suppressed the fact with intent to evade payment of duty. Therefore, mandatory penalty and interest are payable by the respondent.

Respondent’s contentions:- The Learned counsel appearing on behalf of the respondent strongly opposes the contentions of the learned AR and submits that the goods have been cleared under invoices during the month of September, 2004 and invoices could not be issued as the person concerned to issue the invoice was not available, but these goods were cleared through delivery challans and weighment slips were also found in their factory, which were duly recorded by them. Therefore, the allegation of clandestine removal of goods is not sustainable, as duty was to be paid by the respondent by the end of the month. It is further submitted that during the period April, 2004 to September, 2004, the respondent had purchased more than 11000 MT of MS ingots and there was a shortage of only 29.73 MT which is a negligible quantity and that may occur due to the weighment on various weighment machines and without going in the dispute, the respondent has paid the duty on these shortages. Therefore, in these circumstances, penalty is not leviable on the respondent. For the demand of interest, it is submitted that the goods have been cleared in the month of September, 2004 and they have paid the duty in the month of September, therefore interest is not payable.

Reasoning of judgment:- In the impugned order, although interest and penalty have been waived by the Commissioner (Appeals) relying on the Larger Bench decision of the tribunal in the case of CCE, Delhi-III v. Machino Montell (I) Ltd. reported in 2004 (168) E.L.T. 466 and the decision in the case of Rashtriya Ispat Nigam Ltd. v. CCE reported in 2003 (161) E.L.T. 285, holding that as duty has been paid before issuance of show cause notice, therefore penalty and interest are not leviable, but the Hon’ble Supreme Court in the case of UOI v. Rajasthan Spinning and Weaving Mills reported in 2009 (238) E.L.T. 3(S.C.) held that if the ingredients of section 11AC of the act are invoked, mandatory penalty is leviable. Therefore, in the facts and circumstances of the case, they have to look whether the provisions of section 11AC can be invoked in the present case or not. Admittedly, in this case goods had been cleared in the month of September, 2004 and duty liability arose by the end of September, 2004. Moreover, the goods had been cleared through delivery challans and the weighment slips were duly recorded in their records, therefore the provisions of section 11AC of the act, i.e. fraud, collusion, willful misstatement, suppression of the facts and contravention of the provisions of the Act/Rules with intent to evade payment of duty, are not attracted. Therefore, mandatory penalty for these acts is not leviable. Further, they find that a penalty is proposed to be imposed on shortages of inputs. They find that the respondent had purchased 11004 MT in a period of six months and there is a negligible shortage of 29 MT in their inputs and that may occur due to the weighment of inputs on various weighment machines. In these circumstances, it cannot be held that the respondent had cleared the inputs clandestinely and no evidence has been produced by the revenue to this effect. In these circumstances, the provisions of section 11AC of the act are not attracted. Therefore mandatory penalty is not leviable.
As the respondent has paid the duty within the same month, therefore interest is not leviable. In these circumstances, although the reasons for in the impugned order for dropping the interest and penalty are different but conclusion is confirmed, accordingly the appeal filed by the revenue is dismissed.  

Decision:- Appeal was dismissed.

Comment:- The analogy of the case is that duty liability for goods cleared in September discharged by the end of the month, so interest is not leviable. Moreover, any fraud, collusion, willful misstatement, suppression of the facts and contravention of the provisions of the Act/Rules with intent to evade payment of duty is not established and goods were cleared through delivery challans and weighment slips duly recorded. Further, shortages of inputs may also occur due to weighment of inputs on different weighing machines. Therefore, in these circumstances, it was concluded that the penalty is not leviable.

Prepared by: Monika Tak
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com