2010 (3) TMI 988 - AT - Central Excise

Summary

Issues:
1. Application of Section 11AC of the Central Excise Act in a case involving duty evasion.
2. Consideration of extended period and imposition of penalty for non-payment of duty.
3. Interpretation of the requirement to prove deliberate intention to evade duty.

Analysis:
1. The case involved a search operation revealing duty evasion by a company in the clearance of cotton dyed denim fabrics without payment of Central Excise duty. Confessional statements were recorded, and a show cause notice was issued proposing duty confirmation and penalties. The Tribunal initially set aside the penalties, but the High Court remanded the matter for reconsideration of Section 11AC's applicability in light of relevant judgments.

2. The appellant argued against the imposition of penalties, citing a revenue-neutral situation and the absence of deliberate evasion. The Revenue, however, contended that there was suppression of facts and non-payment of duty, referring to a Tribunal decision supporting penalties in similar cases involving duty evasion.

3. Upon considering the submissions, the Tribunal found that the duty paid by one unit could be taken as Cenvat Credit by another unit in the same compound. It was established that there was no deliberate intention to evade duty, as the duty was promptly paid once the omission was noted. The Tribunal emphasized the need for the department to prove mis-declaration or suppression with an intent to evade duty. The Tribunal also referenced relevant judgments, including those of the Supreme Court and High Court, to support its decision that in the absence of proof of evasion, penalties under Section 11AC were not applicable.

In conclusion, the Tribunal upheld its earlier decision, ruling that no penalty was imposable under Section 11AC of the Central Excise Act, 1944, due to the absence of deliberate evasion and the availability of Cenvat Credit between the units.