2016 (9) TMI 1372 - AT - Central Excise

Penalty u/s 11AC read with Rule 25 of CER 2002 - the entire demand and interest was already paid - Held that - on perusal of Section 11A (2B) of the CEA 1944 it is found that since the entire amount of differential duty was paid and intimation was given by the appellant assesse to the Department vide their letter dated 8/5/2008 and 31/7/2008 the SCN dated 19/03/2009 was not required to be issued - it has not been proved by the authorities below that the appellant had suppressed material facts from the department with an intent to evade payment of duty - there is no justification for imposition of penalty - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Section 11AC read with Rule 25 of Central Excise Rules, 2002 without proper mention of provisos.

Analysis:
The case involved a dispute regarding the imposition of a penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002. The appellant contended that the penalty was wrongly imposed as the adjudicating authority did not impose any penalty under Section 11AC. The appellant argued that the lower appellate authority erred in imposing the penalty without mentioning the first and second provisos as mandated by law. The appellant cited relevant legal decisions to support their argument, emphasizing the necessity of complying with procedural requirements for penalty imposition.

The Tribunal examined Section 11A (2B) of the Central Excise Act, 1944, which allows a person to pay the duty before the issuance of a show cause notice and inform the Central Excise Officer to avoid further proceedings. In this case, the appellant had paid the entire amount of differential duty and informed the Department accordingly. The Tribunal referenced legal precedents to support its decision, highlighting that penalties under Section 11AC cannot be imposed if duty has been paid before the issuance of a show cause notice. The Tribunal cited specific cases where penalties were not upheld due to the absence of intentional evasion or suppression of facts by the appellant.

By analyzing the facts and circumstances of the case and considering the legal principles established by previous judgments, the Tribunal concluded that there was no evidence of the appellant intentionally evading duty payment or suppressing material facts. Therefore, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant. The decision was based on the lack of justification for imposing a penalty under Section 11AC, given the appellant's compliance with duty payment and procedural requirements.

This detailed analysis of the judgment highlights the legal intricacies surrounding the imposition of penalties under the Central Excise Act, emphasizing the importance of procedural adherence and the absence of intentional wrongdoing in determining penalty liability.