2009 (10) TMI 811 - AT - Central Excise

Summary

Issues involved: Appeal against imposition of penalty on the assessee and cross-objections filed by the assessee.

Details of the Judgment:

Issue 1: Imposition of Penalty

1. The appeal was filed by the assessee against the penalty imposed by the Commissioner (Appeals) for Rs. 1.25 lakhs, and the Revenue filed an appeal for enhancement of the penalty to Rs. 3,82,395.
2. The assessee, engaged in manufacturing excisable goods, had imported consignments that were rejected by the consignee and re-dispatched after making changes in physical characteristics.
3. The Revenue alleged short-payment of Central Excise Duty by the assessee, resulting in a demand of Rs. 3,82,395 under Section 11A(1) of CEA 1944.
4. The Deputy Commissioner confirmed the duty demand, charged interest under Section 11AB, and imposed a penalty of Rs. 3,82,395 under Section 11AC of CEA 1944.
5. The Commissioner (Appeals) held that the penalty of Rs. 1.25 lakhs was appropriate considering the prompt response of the assessee in admitting the duty demand and making the payment.
6. The Tribunal observed that the demand was made under Section 11A(1) and not under the proviso, which is necessary for imposing penalty under Section 11AC for suppression of facts with intent to evade duty.
7. The Tribunal noted that the assessee, a regular taxpayer, paid the duty promptly upon detection of the issue, indicating no mala fide intent, and that the demand was time-barred.
8. As the proviso to Section 11A(1) was not invoked in the Show Cause Notice, the Tribunal held that penalty under Section 11AC was not warranted due to the absence of necessary ingredients.
9. Consequently, the penalty of Rs. 1.25 lakhs imposed on the assessee was set aside, and the appeal by the assessee was allowed, while the Revenue's appeal was dismissed.

Conclusion:
The Tribunal set aside the penalty imposed on the assessee due to the absence of necessary ingredients for invoking penalty under Section 11AC, despite the duty demand under Section 11A(1) of CEA 1944.