2013 (4) TMI 364 - AT - Central Excise

Penalty u/s 11AC short levied Held that - After hearing both the sides, it is observed from the SCN that penalty under Section 11AC has been proposed by indicating that there is suppression of facts with intention to evade payment of duty. However no facts are disclosed in the SCN as to show the same. When the appellant has honestly paid the entire duty along with the interest before the issuance of the SCN and no such evidence showing intention to evade is relied upon by the Revenue, it is a fit case where penalty under Section 11AC is not attracted.

Summary

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act after payment of disputed amount and interest.
2. Requirement of penalty under Section 11AC in case of short levy detected during audit.

Analysis:
1. The main issue in this case was the imposition of penalty under Section 11AC of the Central Excise Act after the appellant had paid the disputed amount along with interest before the issuance of the show cause notice. The Commissioner (Appeals) upheld the penalty, arguing that the short levy was paid only when detected by the audit party. However, the appellant contended that once the entire disputed amount of duty along with interest had been paid, the penalty under Section 11AC should not be imposed.

2. The argument presented by the appellant was that the penalty under Section 11AC was not required as there was no intention to evade payment of duty since the entire duty along with interest was paid before the show cause notice was issued. The show cause notice proposed the penalty under Section 11AC based on the allegation of suppression of facts with the intention to evade duty. However, it was noted that no specific facts were disclosed in the notice to support this allegation.

3. The Tribunal, after hearing both sides, observed that there was no evidence presented by the Revenue to establish the intention to evade duty. The appellant had acted in good faith by paying the entire duty and interest promptly. Therefore, the Tribunal concluded that in the absence of any proof of intention to evade duty and considering the timely payment made by the appellant, the penalty under Section 11AC was not warranted in this case. Consequently, the appeal filed by the appellant was allowed, specifically regarding the penalty under Section 11AC.

4. In summary, the Tribunal ruled in favor of the appellant, emphasizing that the penalty under Section 11AC should not be imposed when the taxpayer has promptly paid the disputed amount and interest before the show cause notice, and there is no evidence of intentional evasion of duty. The decision highlighted the importance of demonstrating intention to evade duty before imposing such penalties, ensuring fairness and adherence to legal principles in excise matters.