By TIOL News Service

MUMBAI, DEC 04, 2017: THE appellant had allegedly cleared 186.860 MTs of MS Bars during the period 03/02/2010 to 10/12/2010 without accounting for in their books and without payment of Central Excise duty.

A show-cause notice was issued to the appellants and the demand was confirmed and equivalent penalty was also imposed.

The appellant is before the CESTAT and submits that they had paid duty on 02/02/2011 and on 17/02/2011 along with interest and penalty of Rs.1,21,376/- (25% of the duty amount). They, therefore, claimed the benefit of proviso to Section 11A(2) of the CEA, 1944 but the impugned order failed to grant the benefit under the law as it existed when the offence was committed. Inasmuch as it is submitted that the order impugned applied the law as it existed when the show-cause notice was issued.

The AR submitted that the show-cause notice was issued on 10/10/20 12 and the penalty and interest was paid on 19/11/2012 .

The Bench observed that the issue which needs to be decided is - whether the provision of law as it existed at the time of offence would be applicable or the provision of law as it existed at the time of show-cause notice.

Noting that no arguments were advanced by the appellant to support their stand, the Bench extracted the provisions of section 11A of the CEA, 1944 as it existed prior to 08/04/2011, in particular, section 11A(1A) which reads -

"(1A) When any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to sub-section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under section 11AB and penalty equal to twenty-five per cent. of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice."

and observed -

"4.1 In the instant case, the appellants have claimed that they have paid the duty along with interest and 25% of penalty within one month of receipt of show-cause notice. Thus, if the law as it existed prior to 08/04/2011 is applied, this proceedings against appellant would stand concluded…"

The CESTAT also observed that the Commissioner (Appeals) hadrefused to buy the argument of the appellant and had ruled that -

"…The relief claimed by the appellant is by way of relying on certain procedures but the application of such procedures depends directly upon the date of issue of show-cause notice. Hence, the relevant date for the application of provisions of Section 11A(1A) and proviso to Section 11 A(2)/Section 11A (1) (b) of Central Excise Act, 1944 as existing on 10/10/2012, and not Section 11A(1A) and proviso to Section 11 A (2) as existing during February to December, 2010."

Holding that the argument of Commissioner (Appeals) is reasonable, the Bench drew support from the decision in Aneja Property Dealer -   2008-TIOL-2586-CESTAT-DEL and concluded - The courses of action under Section 11A(1A) arises at the time of issue of show-cause notice and therefore, the law as applicable at the time of issue of show-cause notice should be made applicable.

In fine, the appeals were dismissed as being bereft of any merits.

(See 2017-TIOL-4257-CESTAT-MUM)