2015 (3) TMI 1167 - AT - Central Excise

Imposition of penalty - whether non-payment by the appellant was on account of any mala fide or was a result of inadvertent mistake - Held that - The non payment/short-payment was intimated by the appellant themselves to the Revenue with a request to file revised ER-1 returns which request was not accepted by the department. Thereafter they deposited the duty along with interest. Levy of interest by itself can be considered to be a penal action against the assessee. When the appellant was having sufficient balance in their Cenvat credit no assessee would like not to pay first and then to pay subsequently along with interest thus causing interest burden upon him. As such it can be safely concluded that it was an inadvertent mistake on the part of the appellant. Accordingly find no reason to impose penalty and set aside the same. Duty plus interest is confirmed as not contested

Summary

Issues: Penalty imposed under Section 11AC of the Act

Analysis:
1. The appellant, engaged in the manufacture of confectionary and biscuits, failed to discharge duty liability on intermediate goods used captively while filing returns for specific periods.
2. The appellant claimed the non-payment was due to a mistake by their accounts handler, which they detected independently and subsequently requested to file a revised return, but the request was denied.
3. Consequently, penalty proceedings were initiated against the appellant, leading to the current impugned order.
4. The central issue revolved around whether the non-payment was intentional or a genuine mistake. The appellant argued they had enough funds in their Cenvat credit account and PLA during the relevant period, indicating inadvertent error.
5. The tribunal acknowledged the appellant's proactive approach in notifying the revenue about the mistake, requesting a revised return, and later paying the duty with interest. The tribunal considered the interest levy as a penal action in itself.
6. Given the appellant's financial capacity and the subsequent payment with interest, the tribunal concluded that the non-payment was an inadvertent mistake, not a deliberate act. Therefore, the penalty was set aside, confirming only the duty and interest payment.
7. The tribunal disposed of the appeal in favor of the appellant, emphasizing the absence of any malicious intent in the non-payment.

This judgment highlights the importance of intent in penalty imposition under Section 11AC of the Act, emphasizing inadvertent errors and proactive rectification by the appellant as mitigating factors against penalty enforcement.