2011 (3) TMI 1200 - AT - Central Excise

Penalty u/s 11AC - Held that - It is apparent from the facts of the case that there is no charge against the respondent that they have evaded /short-paid the duty by way of fraud collusion willful misstatement suppression of facts or in contravention of the provisions of Act/Rules with an intent to evade payment of duty. Therefore no penalty under Section 11AC is leviable. In favour of assessee.

Summary

Issues:
- Merger doctrine application in the appeal process
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944

Merger Doctrine Application:
The case involved an appeal by the Revenue against an order where the lower appellate authority held that the department's appeal was not maintainable as it merged with the respondent's appeal, which had already been decided. The Revenue contended that mandatory penalty under Section 11AC should have been imposed, which the adjudicating authority did not do. The Tribunal agreed that the doctrine of merger did not apply in this case, citing a Bombay High Court judgment. The Tribunal examined the facts and found that the delay in payment was due to a genuine reason, not an intent to evade duty. As there was no evidence of evasion or suppression of facts, the Tribunal concluded that no penalty under Section 11AC was applicable.

Imposition of Penalty under Section 11AC:
The Revenue argued that the mandatory penalty under Section 11AC should have been imposed as duty demand was confirmed against the respondent. However, the Tribunal noted that Section 11AC mandates a penalty only in cases of fraud, collusion, willful misrepresentation, or suppression of facts to evade duty. The Tribunal referred to a Supreme Court case supporting this interpretation. Since there was no evidence of such behavior by the respondent, the Tribunal held that no penalty under Section 11AC was warranted. Consequently, the Tribunal rejected the Revenue's appeal, finding no merit in their arguments.