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2010 (8) TMI 306 - HC - Central ExcisePenalty - misstatement and suppression of facts payment of demand Held that - A plain reading of the above would show that willful misstatement or suppression of facts with an intention to evade payment of duty is the sine qua non for contracting the penalty provision. It is not the case of the Department that the respondent committed fraud or there was collusion. Their case is that there is misstatement and suppression of facts. If that be so, the factum of intention to evade payment must be clearly proved. It is admitted by the Department that the show cause notice was issued by the Assistant Commissioner on 13-3-2003, which was confirmed on 30-11-2007. Even before the demand made in the show cause notice was confirmed, by 11-2-2003 the respondent had paid the duty of Rs. 96,765/-. Therefore, Section 11AC of the Act is not attracted. - appeal is dismissed
Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). 2. Liability of the respondent for penalty and interest under Sections 11AB and 11AC of the Act. 3. Interpretation of Section 4(1)(a) of the Act regarding determination of duty on goods sold by the assessee. 4. Application of penalty provisions under Section 11AC in cases of willful misstatement or suppression of facts with intent to evade payment of duty. Analysis: 1. The appeal before the High Court was filed by the Revenue against the order of the CESTAT regarding a case involving a company manufacturing "cylinder liners." The company had not paid sales tax while transferring goods from their manufacturing unit to their trading division. The Department initiated penalty and interest proceedings under Sections 11AB and 11AC of the Act. The Tribunal dismissed the appeal, and the High Court reviewed the case. 2. The Standing Counsel for Central Excise and Customs argued that the assessee is liable for penalty and interest in cases of short payment of duty. He contended that the price at which goods are sold by the assessee should determine the duty, and there was misrepresentation by the assessee. However, the High Court noted that willful misstatement or suppression of facts with intent to evade payment of duty is essential for the penalty provision under Section 11AC to apply. Since the Department did not prove the intention to evade payment and the duty was voluntarily paid by the respondent before confirmation of the demand, Section 11AC was not applicable. 3. The High Court highlighted that the Department's case did not involve fraud or collusion but alleged misstatement and suppression of facts. The Court emphasized that the intention to evade payment must be clearly proven for penalty provisions to be invoked. As the duty was paid voluntarily before the demand was confirmed, the Court held that Section 11AC was not attracted. The Tribunal's understanding of the factual background and application of the law were deemed correct, leading to the dismissal of the appeal. 4. In conclusion, the High Court dismissed the appeal, finding no substantial question of law. The judgment emphasized the importance of proving intention to evade payment for penalty provisions to be applicable, and in this case, the respondent's voluntary payment of duty before confirmation of the demand negated the application of penalty provisions under Section 11AC.
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