2010 (1) TMI 600 - HC - Central Excise

Penalty Payment of duty before issuance of SCN alongwith interest Mere delay in payment of excise duty due to financial constraints being faced by the company cannot be an act of fraud or willful evasion thereby holding the assessee to be liable for payment of penalty

Summary

Issues involved:
1. Challenge to the order(s) dated 7-7-2005 and 4-8-2005 passed by CESTAT.
2. Allegations of non-payment of Central Excise Duty by the respondent.
3. Show cause notice issued for demanding duty, interest, and penalties.
4. Confirmation of duty demand, interest, and penalties by the Commissioner.
5. Appeals filed by the Company and individuals against the order-in-original.
6. Tribunal's decision on penalty, interest, and demand of differential amount.
7. Questions of law raised by the Revenue in Central Excise Appeal No. 59 of 2006.
8. Judicial pronouncements on penalty under Section 11AC of the Central Excise Act.

Detailed Analysis:

1. The Revenue challenged the orders dated 7-7-2005 and 4-8-2005 passed by CESTAT, where the appeal filed by the respondent against the order in original dated 03-05-2005 was allowed. The Tribunal relied on a Larger Bench Decision in CCE v. Machino Montell (I) Ltd.

2. The respondent, engaged in the manufacture of Aerated Water, was alleged to have not paid Central Excise Duty on excisable goods cleared in April 2001. The respondent availed Cenvat Credit Facility on raw materials.

3. A show cause notice was issued for demanding duty, interest, and penalties from the respondent. The Commissioner confirmed the demand of outstanding duty, interest, and imposed penalties on the Company and individuals.

4. Appeals were filed by the Company and individuals against the order-in-original dated 3-5-2005. Both appeals were accepted by CESTAT.

5. The Tribunal set aside the demand of differential amount of interest and penalties, ruling that no penalty can be imposed if the duty is paid before the issuance of the show cause notice.

6. The Revenue raised questions of law in Central Excise Appeal No. 59 of 2006 regarding the imposition of penalties and interest under the Central Excise Act.

7. Judicial pronouncements highlighted that penalty under Section 11AC is not leviable if duty is deposited before the issuance of a show cause notice, and there was no fraudulent intent on the part of the assessee.

8. The Court dismissed the Revenue's appeal, stating that there was no fraudulent intent on the part of the assessee, and the questions of law raised were answered against the Revenue based on previous judicial decisions.

This detailed analysis covers the issues involved in the legal judgment comprehensively, providing insights into the background, proceedings, and decisions made by the authorities and the Tribunal.