2010 (1) TMI 1003 - AT - Central Excise

Summary

Issues:
1. Penalty under Section 11AC of Central Excise Act was waived by Commissioner (Appeals).
2. Discrepancy in dates on manually prepared and computer-generated invoices.
3. Allegations of misdeclaration of facts to evade payment of duty.
4. Legal issue raised by the appellant regarding determination of duty under sub-section (2) of Section 11A for imposing penalty.

Analysis:
1. The appellant contested the penalty imposed under Section 11AC of the Central Excise Act, arguing that no duty demand was made in the show cause notice and no determination of duty under sub-section (2) of Section 11A occurred. The Commissioner (Appeals) found the appellant liable for penalty due to the alleged suppression of material facts to evade duty payment. The appellant maintained that the order was unsustainable as it did not follow the provisions of Section 11AC. The Tribunal noted the legal issue raised by the appellant at the appellate stage, emphasizing the necessity of a duty determination under Section 11A(2) for penalty imposition. The Tribunal concluded that the matter required reconsideration by the Commissioner (Appeals) to decide afresh after providing a hearing to the appellant.

2. The dispute involved discrepancies in the dates on invoices. The Commissioner (Appeals) observed that certain invoices were manually prepared on one date but showed a different date on computer-generated versions. The appellant argued that there were no computer-generated invoices with the later date as claimed. The appellant contended that goods were actually cleared on a date different from what was indicated on the invoices. The Tribunal found that the Commissioner (Appeals) based the decision on incorrect facts, as evidenced by records showing the actual clearance date. Consequently, the Tribunal set aside the impugned order for reconsideration.

3. The Revenue alleged that the appellant engaged in misdeclaration of facts to evade duty payment. It was claimed that the appellant prepared invoices before the duty enhancement but cleared the goods after the duty increase, as evidenced by records recovered from the factory premises. The Revenue highlighted a pattern where invoices were manipulated to show an earlier date than the actual clearance date, leading to duty evasion. The Tribunal considered these allegations in the context of the penalty under Section 11AC, which was subject to the determination of duty under Section 11A(2).

4. The appellant raised a legal issue regarding the requirement of a duty determination under sub-section (2) of Section 11A for imposing penalty under Section 11AC. This issue was not presented before the lower authority but was deemed permissible at the appellate stage. The Tribunal found merit in the appellant's argument, emphasizing the importance of a proper determination of duty for penalty imposition. The Commissioner (Appeals) was directed to reassess the imposition of penalty under Section 11AC in light of the legal issue raised by the appellant, ensuring a fair hearing for the appellant in the process.