M/S Akashdeep Pipes And Fittings Private LTD. vs. The Commissioner Of Central Excise, Central Revenue Building

Held

The High Court held that the CESTAT, as the apex fact-finding body, had recorded the finding that the appellant had entered fake challan numbers in the ER-1 return. This finding was based on the available materials. The Court observed that the appellant deposited the entire duty with interest only after receiving a telephonic message from the department, indicating that the issue was noticed by the department first. The Court considered this a pure question of fact and stated that it could not delve into questions of fact at the appeal stage. Consequently, the Court found no substantial question of law arising from the facts and circumstances of the case. The appeal was dismissed.

Facts

The appellant, M/s Akashdeep Pipes & Fittings Private Ltd., filed an appeal before the Patna High Court against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had upheld the imposition of a penalty of Rs. 8,47,131/- under Section 11AC of the Central Excise Act, 1944. The appellant contended that the anomaly in the particulars of GAR-7 regarding duty payment through PLA was due to staff error and not suppression or misstatement with intent to evade duty. They claimed to have deposited the entire duty amount of Rs. 16,94,261/- along with interest and penalty under protest before the issuance of the show cause notice. The Joint Commissioner had noted that while duty liability was declared in the ER-1 return, false challan numbers were used. The CESTAT, however, held this to be a case of willful misstatement and fraud, justifying the penalty under Section 11AC.

Key Issues

1. Whether the appellant's act of entering fake challan numbers in the ER-1 return, despite declaring the duty liability, constitutes suppression of fact or misstatement with the intention to evade payment of duty, thereby attracting Section 11AC of the Central Excise Act, 1944? Petitioner's arguments: The appellant argued that the anomaly in GAR-7 particulars was due to staff error and not an intentional act to evade duty. They contended that since the entire duty, interest, and penalty were deposited before the show cause notice was issued, Section 11AC should not be attracted. They relied on the fact that their duty liability was declared in the ER-1 return. Respondent's arguments: The respondent (revenue) argued, as upheld by the CESTAT, that the burden of providing fake challan numbers in the ER-1 return could not be shifted to the staff. Therefore, it was considered a case of willful misstatement, fraud, etc., warranting the imposition of penalty under Section 11AC.