2009 (5) TMI 787 - AT - Central Excise

Summary

Issues involved: Appeal against imposition of penalty under Section 11AC of Central Excise Act, 1944.

Summary:
1. The appellant, a public limited company, operated under a franchise agreement providing services and manufacturing excisable goods. They availed small scale exemption till 31-3-2003. Changes in exemption criteria led to the department finding the appellant crossed the limit, requiring payment of excise duty. The appellant paid the duty before a show cause notice was issued. The original authority confirmed the duty demand and imposed a penalty under Section 11AC.

2. The appellant appealed challenging only the penalty imposition. The Commissioner (Appeals) upheld the penalty, stating the appellant suppressed clearance value. The appellant argued they were in correspondence with the revenue since 1997, providing information when asked. They contended the penalty was not applicable as the issue was known to the department.

3. The main contention was the appellant's eligibility for the exemption. The appellant, though aware of the liability, disputed only the penalty under Section 11AC. The revenue argued the appellant did not file a declaration for exemption as required.

4. Correspondence from 1997 showed the appellant's engagement with the revenue. The appellant had sought advice on excise provisions and informed the department about their manufacturing activities. The appellant paid the duty before any notice was issued, indicating no intention to evade duty or suppress facts.

5. The Tribunal found no grounds for penalty imposition under Section 11AC due to the appellant's proactive engagement with the revenue, absence of evasion intent, and timely duty payment. The penalty was set aside while confirming the duty and interest. The appeal on penalty setting aside was allowed.