Order Date: 26 August 2022

Facts-

• The Appellants, M/s Micky Metals Limited submitted that subsequent to audit observation, it was noticed that the Appellant had stock transferred their finished goods to depot at Ghaziabad Branch after paying Excise duty at factory gate and subsequently sold the same from the depot at Ghaziabad Branch. 
• The assessee had adopted the valuation in respect of their finished goods cleared to depot on the basis of transaction value under Section 4 (1)(a) of the Central Excise Act, 1944 instead of Rule 7 of the Central Excise Valuation Rules, 2000 as amended. 
• The Appellant immediately accepted their default and paid the entire amount of Central Excise duty along with interest. Subsequently, Show-cause notice was issued to the Appellant, which was adjudicated by Order-in-Original.
• The Appellant filed an appeal before the Ld. Commissioner (Appeals) for setting aside the equal amount of penalty imposed under the provisions of Rule 25(1) (d) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. However, The Ld. Commissioner (Appeals) rejected the appeal before him and upheld the penalty.
• Thereafter, the Appellant filed the present appeal before the Tribunal.

Issue-

• Whether valuation adopted by the assessee on the basis of transaction value under Section 4(1)(a) of the Central Excise Act, 1944 or should have followed the provisions of Rule 7 of the Central Excise Valuation Rules, 2000?

Order-

• The Tribunal observed that the penalty provision stands attracted where duty of excise has not been levied or paid or has been short-levied or short-paid by the reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. Thus, the prerequisite being there should be material to establish that all these have been committed with an intent to evade payment of duty.
• The Tribunal further observed that in the show cause notice except for stating that the assessee has contravened the provisions of the Rules, there is no specific allegation so as to hold the assessee guilty of having committed fraud, collusion or suppression of facts or made any wilful misstatement with an intent to evade payment of duty. 
• Thus, in the absence of any such specific allegation the authority cannot mechanically impose penalty under Section 11AC of the Act. Moreover, the duty itself has been remitted even prior to issuance of show-cause notice.
• The Tribunal relied in the decisions of Hon’ble High Court CCE, Bangalore II Vs. Pushpadeep Enterprises: 2012 (279) ELT 503 (Kar.) and other on this issue and held that when the entire demand along with applicable interest has been paid by the Appellant before issuance of show-cause notice, hence there was no occasion to issue any show-cause notice.
• Accordingly, the penalty is set aside and the appeal filed by the appellant is allowed with consequential relief.