2008 (12) TMI 469 - AT - Central Excise

Summary

Issues:
Whether goods removed without payment of duty on the same day and subsequently duty being paid immediately upon interception by Revenue Authorities attract penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The central issue in this appeal was whether the removal of goods without payment of duty on the same day, followed by the immediate payment of duty upon interception by Revenue Authorities, would trigger the penalty under Section 11AC of the Central Excise Act, 1944. The Appellant argued that penalty should not be imposed as duty was not determined under Section 11A(2) of the Act since it was paid on the spot. The Adjudicating Authority concurred, stating that no recovery of duty was necessary as it had already been paid. The Appellant contended that the penalty imposed by the Appellate Authority was unjustified under the law. The Appellant's representative emphasized that the penalty should be read in conjunction with Section 11A(2) to absolve the Appellant from liability. Conversely, the Departmental Representative maintained that the Appellate Authority rightly upheld the penalty, opposing any interference with the decision.

Upon deliberation, the Tribunal observed that while duty was indeed paid promptly after the goods were removed, it was not paid at the time of removal, and no determination was made under Section 11A(2) of the Act. Consequently, the Tribunal concluded that Section 11AC did not warrant the imposition of a penalty equal to the duty amount. The Tribunal pointed out the specific provision in Section 11AC, stipulating that penalty liability arises only when duty is determined under Section 11A(2). This statutory provision aimed to exempt individuals from penalties, as evidenced by the first proviso allowing for reduced penalties. Accordingly, the Tribunal ruled in favor of the Appellant, setting aside the Appellate Authority's decision and absolving the Appellant from any penalty.

In conclusion, the Tribunal allowed the appeal, emphasizing the statutory provisions under the Central Excise Act, 1944, and the specific conditions triggering penalty liabilities under Section 11AC. The judgment clarified that immediate payment of duty upon interception by Revenue Authorities, without prior determination under Section 11A(2), did not warrant penalty imposition, thereby exonerating the Appellant from penalty obligations.