Whether the fundamental requirement of intent to evade the payment of duty was duly established so as to attract the extended period of limitation?

PJ/Case Laws/2012-13/1152

Case: ISPAT INDUSTRIES LTD V/S COMMISSIONER OF C. EX., RAIGAD

Citation: 2011 (271) E.L.T. 506 (Bom.)

Issue:- Whether the fundamental requirement of intent to evade the payment of duty was duly established so as to attract the extended period of limitation?

Brief Facts: - This Appeal arises out of an order of the Tribunal dated 29th May 2009 [2009 (247) E.L.T. 498 (Tribunal)]. The Tribunal by the order impugned in these proceedings has confirmed the order of the Commissioner (Appeals) dated 14th January 2008.
A show cause notice was issued to the assessee on 18th October 2004. The allegation against the assessee was that certain inputs and capital goods had been cleared by the assessee on a loan basis to another Unit, Ispat Metallics Limited during the period between April 2000 and August 2001 in contravention inter alia of the provisions of the Rule 57F(3) of the Central Excise Rules, 1944. The notice recited that on this being pointed out, the assessee debited a duty amount of Rs. 1,53,394/-. However, interest on delayed payment was not paid. The assessee submitted a reply to the notice. By an order dated 23rd December 2005, the Deputy Commissioner, Central Excise, held that since the assessee had not discharged its obligation to pay the amount of duty of Rs. 1,53,394/- till it was unearthed by the Department an intention to evade duty “can fairly be presumed” and the extended period of limitation to confirm the demand “can fairly be invoked”. This part of the order of the Adjudicating Authority was confirmed by the Commissioner (Appeals) on 8th March 2006. The Tribunal by its order dated 22nd June 2007 remanded the proceedings back to the Commissioner (Appeals) holding that no finding had been rendered on the submission raised by the assessee that the confirmation of demand by the Adjudicating Authority was not correct and the order in original travelled beyond the notice to show cause. The Commissioner (Appeals) in his order dated 14th January 2008 thereupon held that the assessee made a voluntary payment of an amount of Rs. 1,53,394/-. In this factual position, the confirmation of the demand was held to be correct and legal and was upheld. In Appeal, the Tribunal held that while the order of the Commissioner (Appeals) was not happily worded, it substantially met the requirement of the remand order of the Tribunal.
The following ground was urged by the assessee in a reply dated 18th July 2005 to the notice to show cause:
“Without prejudice to the above, we respectfully submit that the Notice has erred in alleging that there was no intention to evade payment of duty on our part inasmuch as, whatever amount would have been paid by us at the time of clearance of inputs as such, was immediately available to Ispat Industries Ltd, which is our group concern, as Modvat credit and that there could be no intention to evade payment of duty as is alleged in the Notice. We are enclosing herewith a summary statement of Modvat balances and payments made by both the companies during the relevant period. A perusal of the same would show that we had in fact accumulated credit, while Ispat Industries Ltd., were paying in cash through PLA and it would have been beneficial to the group to liqauidate the credit at our end and utilize the same for payment of duty in respect of clearances made by it, there being no cash flow out, the same further established that there could have been no intention to evade payment of duty.”
Appellant’s Contention: - The appellants contended that the Tribunal while holding that the requirements of Section 11AC of the Central Excise Act, 1944 had been met, merely observed that the allegation of the Department that they had contravened various provision of the Rules with an intent to evade the payment of duty was not successfully contested by them. This, it has been urged, is erroneous since a specific ground was raised in reply to the notice to show cause.
Further it was urged that their basic contention that there was no intent to evade payment of duty has not been considered.
Reasoning of Judgment: - The High Court held that from the reply filed by the assessee to the notice to show cause it has been extracted that since it is evident that the defense of the assessee was that there was no intent to evade the payment of duty. Whether that was so or otherwise was a matter which ought to have been determined, but has not been determined by the Tribunal. In these circumstances, they are of the view that an order of remand would be warranted in the facts of this case.
Decision: - The appeal was disposed off.

Comment:- When the intent to evade payment of duty is not there, then penalty cannot be imposed. It cannot be presumed on the ground that the assessee has paid the duty.

Comments

PJ/Case Laws/2012-13/1152

Post a Comment

Query