2015 (9) TMI 350 - HC - Central Excise

Demand of penalty - willful mis-statement or suppression of facts or contravention of any of the provisions of the Central Excise Act or the Rules - Intention to evade duty - Held that - The adjudicating authority having not recorded any such satisfaction there was no justification for upholding the imposition of penalty. The Tribunal may have recorded a single line conclusion and with regard to requantification of duty dispute, but we have independently perused the record, applied our mind and found that the ingredients of Section 11AC are not attracted to the given facts and circumstances. Therefore, even if the duty demand is confirmed, the Tribunal s direction deleting penalty is not required to be interfered with by us in our further appellate jurisdiction. - Once there was a scope for entertaining a doubt, and there is no willful mis-statement or suppression of facts, then, penalty is not called for. The imposition is only in the event the ingredients necessary to be satisfied are attracted and so satisfied - Decided against Revenue.

Summary

Issues:
1. Interpretation of Section 11AC of the Central Excise Act, 1944 regarding the mandatory nature of penalty.
2. Relevance of proviso (3) to Section 11AC in determining penalty in cases of duty requantification.
3. Application of penalty under Rule 209A of the Central Excise Rules, 1944 based on misleading statements.

Analysis:
Issue 1:
The primary issue in this case revolves around the interpretation of Section 11AC of the Central Excise Act, 1944, specifically focusing on whether the provision mandates the imposition of penalties in cases of duty determination. The Tribunal set aside the penalty imposed by the Order-in-Original, prompting the Revenue to argue that the Tribunal failed to acknowledge the mandatory nature of the penalty under Section 11AC. The Revenue contended that the assessee was aware of the duty liability related to additional considerations received, and thus, the penalty should have been upheld. On the contrary, the assessee's representative argued that the Tribunal's decision was justified as the issue was debatable and did not involve willful misstatement or suppression of facts, citing relevant case laws to support their stance.

Issue 2:
The second issue pertains to the relevance of proviso (3) to Section 11AC in cases where duty determination is altered by the appellate Tribunal. The dispute focused on whether penalty imposition is justified when duty requantification is the primary concern. The Order-in-Original detailed the recovery of charges for moulds and the subsequent investigations, leading to conflicting views by the Tribunal. The Tribunal's decision to delete the penalty was supported by the absence of evidence demonstrating willful misstatement or intent to evade duty payment, aligning with the principles outlined in relevant legal precedents.

Issue 3:
The final issue addresses the application of penalty under Rule 209A of the Central Excise Rules, 1944 based on misleading statements made by the Director. The Order-in-Original highlighted the recovery of charges from M/s. Telco and the subsequent allegations regarding the additional consideration to be added to the assessable value. The Tribunal's resolution of the conflicting views and the absence of evidence supporting willful misstatement led to the dismissal of the penalty. The reliance on legal judgments emphasizing the necessity of satisfying specific criteria for penalty imposition further supported the Tribunal's decision.

In conclusion, the High Court dismissed the appeal, emphasizing that penalty imposition under Section 11AC requires the satisfaction of specific conditions, such as willful misstatement or intent to evade duty payment. The detailed analysis of the issues involved underscored the importance of legal precedents and the factual context in determining the applicability of penalties in excise duty cases.