2012 (12) TMI 1003 - HC - Central Excise

When the show cause notice contains detailed narration of events apparently leading to the conclusion of intention to evade payment of duty, whether mere non-invocation of specific/provision to Section 11A will vitiate the show cause notice for purpose of imposition of penalty under Section 11AC of Central Excise Act, 1944?

Summary

Issues:
1. Appeal filed by Revenue under Section 35G of the Central Excise Act, 1944 against Tribunal's order.
2. Justification of Tribunal's dismissal of Revenue's appeal.
3. Setting aside of penalty order under Section 11AC imposed on the assessee.

Analysis:
1. The judgment involves an appeal by the Revenue under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The Tribunal had dismissed the Revenue's appeal, leading to the question of whether the Tribunal's decision was justified in dismissing the appeal filed by the Revenue.

2. The crux of the matter lies in the setting aside of the penalty order imposed on the assessee under Section 11AC of the Act. The Tribunal upheld the setting aside of the penalty order based on the fact that the assessee had already deposited the entire amount of duty involved before the issuance of the show cause notice demanding the penalty amount. The Tribunal relied on decisions from the Madras and Karnataka High Courts, which held that no penalty should be imposed if duty or penalty has been deposited before the issuance of a show cause notice under Section 11AC.

3. The judgment further discusses that the Tribunal's decision was in line with a similar view taken by the Tribunal at Bangalore in a different case, which was upheld by the Supreme Court. The Court agreed with the Tribunal's reasoning, emphasizing that if the duty amount had been deposited before the show cause notice, it indicated no intention to evade payment of duty by the assessee. Therefore, the imposition of a penalty under Section 11AC was deemed unnecessary in this scenario.

4. Ultimately, the Court found no substantial issues of law warranting a different decision in the appeal. The judgment concludes that the appeal lacks merit and is dismissed accordingly, aligning with the decisions of the Tribunal and the High Courts regarding the deposit of duty prior to the issuance of show cause notices under Section 11AC.