2018 (3) TMI 1656 - AT - Central Excise

Penalty u/s 11AC - whether the lower authorities were correct in imposing penalties on the appellant under Section 11AC or otherwise for the fraud committed by the appellant in the form of availing credit in PLA without the cheques being honoured by the bankers? Held that - The appellant has no case on merits as there is an admission on the part of the partner Shri Manoj Patil that they are ineligible credit in the PLA by depositing cheques which were in the knowledge, will be bounced - both the lower authorities were correct in confirming the demand raised along with interest and appropriating the amount as well as imposing equivalent amount of penalty - Appeal dismissed.

Summary

Issues involved:
Imposition of penalties under Section 11AC for fraudulently availing credit in PLA account without honored cheques.

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai - I. Despite the absence of the appellant, the appeal was taken up for disposal due to the narrow issue at hand. The key issue was whether penalties imposed on the appellant under Section 11AC were justified for fraudulently availing credit in the PLA account without the cheques being honored by the bankers. The appellant admitted to the fraud and paid the Central Excise duty along with interest. The appellant contested only the penalty, arguing that the Revenue was aware of the credit availed on GA7 challans provided by the bankers and that the show cause notice was beyond the limitation period.

Upon review, it was found that the appellant had no case on merits as there was a clear admission by the partner regarding the fraudulent activity. The partner admitted to availing ineligible credit in the PLA by depositing cheques that were known to bounce. This admission was made in official statements. Given this admission, the lower authorities were deemed correct in confirming the demand, interest, and penalties. The appellant's argument regarding the Revenue's awareness and the limitation period for the show cause notice was not found to be valid. Consequently, the appeal was rejected.

This judgment highlights the importance of admitting to fraudulent activities and the consequences of such actions in the context of penalties under Section 11AC. The case underscores the significance of clear admissions and the impact they have on the legal proceedings and the imposition of penalties.