2007 (3) TMI 71 - HC - Central Excise

Penalty Appellant has already paid the short levied duty before issuance of show cause notice Held that no penalty amount charged from assessee for non payment of duty

Summary

Issues involved:
1. Levy of penalty under Section 11AC of the Central Excise Act, 1944 when duty is paid before the issuance of a show cause notice.

Analysis:

Issue 1: Levy of penalty under Section 11AC of the Central Excise Act, 1944 when duty is paid before the issuance of a show cause notice

In the first case, the Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act because the duty had been paid before the issuance of the show cause notice. The Tribunal relied on the decision of the Bombay High Court in the case of CCE v. Gaurav Mercantiles Ltd. where it was held that if duty has been paid before the issuance of the show cause notice, no penalty can be levied under Section 11AC. The Tribunal emphasized that the duty was already paid before the show cause notice was issued, making it not liable for penalty under Section 11AC.

In the second case, the manufacturer deposited the short levied duty before the issuance of the show cause notice. The Commissioner (Appeals) affirmed the short levy of duty but set aside the penalty levied under Rule 173Q. The Tribunal, following the decision in CCE v. Gaurav Mercantiles Ltd., held that since the duty had been paid before the issuance of the show cause notice, no penalty under Section 11AC could be levied. The Tribunal dismissed the appeal, stating that the consistent view of different High Courts and the Supreme Court supported the position that no penalty under Section 11AC should be imposed if duty has been paid before the issuance of the show cause notice.

Therefore, based on the consistent interpretation of various High Courts and the Supreme Court, it is established that if duty has been paid before the issuance of a show cause notice under Section 11AC of the Central Excise Act, no penalty can be levied. The appeals were dismissed in both cases as the duty had been paid before the issuance of the show cause notice, making the imposition of penalty under Section 11AC unwarranted.