2015 (11) TMI 250 - AT - Central Excise

Imposition of penalty u/s 11AC - Malafide intention - Evasion of duty - Held that - The duty involved in the present case is ₹ 24,376/-. We note that the appellant is not disputing the duty amount as also the interest leviable thereon. Their only submission is that they had no wilful intention to evade payment of duty or suppression of fact and non-inclusion of the cost of printing cylinder was a bona fide mistake. - Keeping in view the overall conduct of the appellant at the time of audit as also the amount of duty involved in the case, we do not consider the present case to be a fit case for imposition of penalty under Section 11AC. We, therefore, set aside the penalty under Section 11AC. Barring the above modification, the impugned order is upheld. - Appeal disposed of.

Summary

Issues:
1. Request for waiver of penalty under Section 11AC for non-inclusion of printing cylinders cost in final product manufacturing.
2. Consideration of appellant's conduct and duty amount involved in determining penalty imposition.

Analysis:

Issue 1: Request for waiver of penalty under Section 11AC
The appellant, involved in manufacturing printing cylinders for customers, faced an issue when the cost of these cylinders was not accounted for in the final product manufacturing. The Revenue highlighted this during an audit, leading the appellant to promptly pay the duty and interest owed. The appellant, through their counsel, acknowledged the duty and interest but sought a waiver of penalty under Section 11AC. They argued that the omission was unintentional, emphasizing their lack of intent to evade duty. The counsel contended that the absence of Section 11AC criteria in the case warranted penalty exemption.

Issue 2: Imposition of Penalty Evaluation
In assessing the situation, the Tribunal reviewed the submissions from both parties. The duty amount in question was Rs. 24,376, which the appellant did not contest, along with the accompanying interest. The Tribunal observed the appellant's response during the audit and the duty sum involved. Considering the appellant's behavior and the duty amount, the Tribunal concluded that the case did not merit penalty imposition under Section 11AC. Consequently, the penalty under Section 11AC was set aside, upholding the rest of the impugned order. The appeal was resolved with the penalty waiver and the impugned order's affirmation.

This judgment underscores the significance of intent and conduct in penalty decisions, emphasizing the need for a bona fide approach in tax matters. The Tribunal's assessment focused on the circumstances surrounding the omission, ultimately leading to a penalty waiver due to the absence of deliberate evasion. The case highlights the balance between duty enforcement and recognizing genuine errors, ensuring fair treatment in tax compliance matters.