2010 (11) TMI 916 - AT - Central Excise

Summary

Issues:
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The case involved the imposition of a penalty on the appellant under Section 11AC of the Central Excise Act, 1944. The facts revealed that the appellants had cleared a duty-paid stock of High Speed Diesel Oil (HSD) before the presentation of the budget in 1999. Subsequently, they sold the pre-budget stock at a higher price, including an enhanced rate of excise duty. The excess excise duty collected from customers was deposited with the central excise department in compliance with Section 11D of the Central Excise Act. However, a show cause notice was issued for recovery and imposition of penalty. The Commissioner confirmed a demand against the appellants under Section 11D, ordered appropriation of the amount paid, demanded interest, and imposed a penalty under Section 11AC. The appeal was specifically against the imposition of the penalty under Section 11AC.

The appellant's counsel argued that the excess amount charged from customers was paid to the government as required by Section 11D, and there was no intent to evade duty. It was contended that Section 11AC, which deals with penalties for fraud or wilful suppression of facts, did not apply to this case. The Departmental Representative defended the impugned order, supporting the Commissioner's findings.

After considering the submissions, the Tribunal found that the appellants had complied with Section 11D by paying the excess excise duty collected from customers to the government. There was no evidence of fraud, misstatement, or wilful suppression of facts to evade duty. The Departmental Representative acknowledged the absence of such allegations. As a result, the Tribunal concluded that penalty under Section 11AC was not warranted in this case. Therefore, the Commissioner's order imposing the penalty was set aside, and the appeal was allowed.

In the final judgment, the Tribunal clarified that since the appellants had adhered to Section 11D without any allegations of duty evasion through fraudulent means, the penalty under Section 11AC was deemed unnecessary. The impugned order was modified accordingly, and the penalty imposed on the appellant was revoked.