2015 (8) TMI 1402 - AT - Central Excise

Penalty - short payment of duty - Held that - due to some programming error in the software, the correct duty liability was not reflected, resulting in short payment of duty during the relevant period. On detection of mistake regarding wrong computation of duty liability, the appellants had deposited the appropriate duty in the Central Govt. account, before issuance of SCN - the authorities below had not specifically discussed as to the involvement of the appellant in the activities involving fraud, collusion, misstatement, etc. with the intent to evade payment of Central Excise duty. Thus, intention to evade payment of duty by the appellant has not been proved by the authorities below with any tangible evidence - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of penalty by authorities below.

Analysis:
The appeals were against an order upholding a demand for short payment of duty on cement. The appellants manufacture Ordinary Portland Cement and Pozzolana Portland Cement. The Central Excise Department found that the appellants were clearing cement at a duty rate lower than required. Show cause notices were issued, resulting in adjudication orders confirming the duty demand, interest, and penalties. The appellants argued that the non-payment was due to a computer program error, and they had deposited the full duty and interest before the notices. The issue revolved around the imposition of penalties. The authorities had not proven fraudulent intent by the appellants. The Tribunal found that since the duty and interest were paid before the notices, the penalties were not justified. The penalties were set aside, and the appeals were allowed in favor of the appellants.

In conclusion, the Tribunal set aside the penalties imposed on the appellants, as the authorities failed to prove fraudulent intent, and the duty along with interest had been paid before the show cause notices were issued. The judgment highlighted the importance of tangible evidence to establish intent to evade payment of duty and emphasized that penalties should be imposed judiciously in cases where duty liabilities are rectified promptly upon detection of errors.