2011 (4) TMI 602 - HC - Central Excise

Imposition of penalty u/s Section 11AC - assessee is liable to pay duty only if the intention of payment of tax is not there and if the assessee is contesting their liability - if he has paid the duty and interest, it cannot be said that a case for imposing penalty is made out. - Though the Tribunal has not given the reasons for not levying penalty, in the facts and circumstances of the case are satisfied that it is not a case where the assessee can be accused of conducting in such a manner so as to evade payment of tax - As he has paid the duty and interest do not find any justification, to interfere with the order passed by the Tribunal granting him the relief of non-payment of penalty - Decided in favour of assessee.

Summary

Issues:
Challenge to order imposing penalty based on non-payment of duty calculated on ACP basis.

Analysis:
The High Court judgment pertains to an appeal filed by the revenue challenging a Tribunal order setting aside a penalty imposition. The case involved the assessee's failure to pay duty calculated on ACP basis for August 1997, despite discharging duty based on actual clearance. The authorities levied duty and penalty, but after almost a decade, the assessee accepted the liability to pay duty on ACP basis and settled it along with interest. The key issue was whether the assessee was liable to pay penalty. Section 11AC, which imposes penalties, specifies the circumstances under which penalties are leviable. The rule aligns with this section, stating that penalties are applicable if the assessee intentionally evades tax payment. In this case, since the assessee contested the liability, paid duty and interest, and lacked an intention to evade tax, the Court found no grounds for penalty imposition. The Tribunal's decision not to levy a penalty was upheld, as the assessee's actions did not indicate an attempt to evade tax. Consequently, the appeal lacked merit and was dismissed, with the question of law decided in favor of the assessee against the revenue.

This comprehensive analysis highlights the legal intricacies surrounding the imposition of penalties for non-payment of duty calculated on the ACP basis, emphasizing the importance of intention to evade tax as a determining factor in penalty assessments. The judgment underscores the need for a clear intention to evade tax for penalties to be applicable, even in cases where duty liabilities are contested and subsequently settled.