2011 (3) TMI 685 - AT - Central Excise

Penalty u/s 11AC - Wrong SSI Exemption - Payment of duty before issuance of SCN - As the department itself is alleging that the respondents have taken the benefit of notification wrongly it cannot be said that there was any intention to evade duty by the respondents - In the absence of any intent to evade duty, no penalty is leviable under Section 11AC of the Central Excise Act, 1944 as held by the Hon ble Apex Court in the case of UOI v. Rajasthan Spinning & Weaving Mills 2009 -TMI - 33419 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
Whether penalty under Section 11AC of the Central Excise Act, 1944 is imposable on the respondents or not in the facts and circumstances of the case.

Analysis:
The appeal was against an order where the mandatory penalty under Section 11AC was dropped against the respondents based on a previous Tribunal decision. The Revenue challenged this decision, leading to a remand by the Hon'ble High Court of Bombay. The key issue was whether the penalty was applicable in this case. The Revenue argued that the penalty should be imposed as per the Supreme Court's ruling in a specific case. However, the respondents contended that there was no suppression of facts, as they had provided a balance sheet to the department.

In the judgment, the Tribunal analyzed the allegations against the respondent, noting that the department accused them of wrongly claiming exemption under a notification. The Tribunal observed that since the department itself acknowledged the incorrect benefit claimed by the respondents, there was no intent to evade duty. Therefore, the Tribunal held that no penalty was leviable under Section 11AC, citing a relevant Supreme Court decision.

Ultimately, the Tribunal found no issue with the impugned order and upheld it, rejecting the appeal filed by the Revenue. The decision was based on the absence of intent to evade duty, as highlighted by the Supreme Court precedent referenced in the case.