ORDER
K.C. Mamgain, Member (T)
1. This is an appeal filed by M/s. TAFE against Order-in-Appeal No. 193/2003-C.E., dated 30-7-2003 passed by the Commissioner of Central Excise (Appeals), Bangalore-I.
2. Shri Rajesh Chander Kumar, Advocate appeared for the appellants and Shri L. Narasimha Murthy, Ld. SDR appeared for the Revenue.
3. Shri Rajesh Chander Kumar pleaded that in this case the only issue under dispute is imposition of penalty under Section 11AC on the appellants. He stated that the appellants were clearing their goods on stock transfer basis to their depots on payment of appropriate central excise duty. As and when there was an increase/revision in the price, the appellants used to file revised declaration. The Head Office of the appellant at Chennai were collating the data from various depots and prepare a statement showing the enhanced price at which the goods were sold from the depots. On the basis of such statements, they were remitting the differential duty voluntarily. With effect from 1-4-99, SAP was introduced by the Company in the factory and depots and subsequently all the data of the clearances made from the factory as well as the depots was made available online. In view of this the Head Office of the Company stopped preparing statement indicating the differential duty payable and required the respective factories to work out the differential duty themselves by drawing report from the computer system on the basis of the data available online. With effect from 1-4-99, the factory generated report every month to determine the differential duty, if any payable. However, due to snag in their computer they could not point out the correct differential duty immediately. However, they located that for the period from 1-4-1999 to 31-12-2000, they have short-paid duty of Rs. 3,70,759/-which was paid by them voluntarily. Subsequently, in the second week of February 2001, the audit party checked the correctness of the differential duty and found that the differential duty was short-paid by them to the extent of Rs. 4,78,061/- from 4/99 to 3/2001. They paid the differential duty on 12-4-2001. However, Show Cause Notice was issued to them demanding differential duty of Rs. 8,41,190/- and Cess of Rs. 7,630/- totally amounting to Rs. 8,48,820/-. This Show Cause Notice was decided by the Additional Commissioner of Central Excise, Bangalore-II who confirmed the duty demanded under Section 11A and appropriated the amount already paid. He also imposed penalty of Rs. 8,48,820/-under Section 11AC of Central Excise Act and demanded interest under Section 11AB of the said Act. On appeal, the Commissioner (Appeals) reduced the penalty to Rs. 4,78,061/- and upheld the rest of the Order of the Additional Commissioner. He pleaded that when the appellants had paid the differential duty voluntarily, penalty and interest under Sections 11AC and 11AB is not leviable, in view of the Tribunal’s decision in the following cases :
(a) Eicher Demm v. CCE, Chandigarh [2002 (140) E.L.T. 227 (Tri. - Del.)] (b) EID Parry (I) Ltd. v. CCE, Jaipur [2003 (157) E.L.T. 193 (Tri. -Chennai)] (c) Ashok Leyland Ltd. v. CCE, Chennai [2003 (156) E.L.T. 995 (Tri. -Chennai)] He also pleaded that in case the request of appellant on non-imposition of penalty under Section 11AC is not accepted then the penalty may be reduced as Section 11AC prescribes for maximum penalty and considering the circumstances of the case that the short-payment was due to the mistake of the computer systems, the penalty may be reduced.
4. Shri L. Narasimha Murthy, ld. SDR pleaded that in this case the voluntary payment of the duty was to the extent of Rs. 3,70,759/- and to this extent the Commissioner (Appeals) has already reduced the penalty. The differential duty amounting to Rs. 4,78,061/- was detected by the Department. If the appellants had not been able to detect the short-payment of duty although collected by them at their depots even after two years of running of the SAP system in the computer, it cannot be said that there was no intention to evade payment of duty. The audit parties had detected short-payments from the same computer system. Therefore, appellants’ plea of non-imposition of penalty under Section 11AC may not be accepted. However he has no objection in reduction of penalty. He relied on the decision of the CESTAT in support of his argument that even though the differential duty was paid before issue of Show Cause Notice, still penalty under 11AC is leviable as reported in the case of Indian Oil Blending Ltd. v. CCE, Kolkata [2002 (53) RLT 224 (CEGAT – Kol.)]
5. I have carefully considered the submissions made by both the sides. 1 find that in this case the appellants had not paid the differential duty of Rs. 8,48,820/- for the period from 1-4-99 to 3/2001 on the ground that there was snag in the computer after introduction of SAP system. However, they have voluntarily paid the duty of Rs. 3,70,759/-. The balance amount was also paid when it was pointed out by the Central Excise audit. Thus, they have voluntarily paid the duty and therefore penalty under Section 11AC is not imposable. I find that voluntary payment of duty is that payment which is detected by the assessee himself and then he pays the duty without being pointed out by the Revenue. Such payment can only be considered as voluntary payment for non-imposition of penalty under Section 11AC. The decision relied upon by the appellants are for voluntary payments. Once the duty, short-paid or not paid is detected by the Revenue and thereafter if the assessee pays the duty then it cannot be considered as a voluntary payment as such amount is recovered at the instance of the Department. In the present case the appellants detected the short-payment of Rs. 3,70,759/- by themselves from the computer statements and they paid it. However, they failed to detect the short-payment of Rs. 4,78,061/- for the same period which was pointed out by the Central Excise audit. Once the audit objection was taken then the process of issuing show cause notice by the Revenue takes time. In the meantime the appellant made the payment before issue of the show cause notice. I find that from those very computer statement when the audit party could point out the further short-payment of duty of Rs. 4,78,061/- then the action of appellant by not working out the correct duty liability and not correcting the computer system for two years can only be with an intention to evade payment of duty. Commissioner (Appeals) has already given benefit of reducing the penalty for the voluntary payment made by the appellants. However, considering the fact that after short-payment pointed out by audit, the appellants have taken step to correct their computer system and also paid the amount before issue of show cause notice. I am inclined to reduce the amount of penalty imposed on the appellants. I find that the Commissioner (Appeals) has already reduced the penalty amount equivalent to duty which was paid by the appellant voluntarily. However, considering the facts and circumstances of the case, I reduce the penalty to Rs. 2,00,000/-.