2017 (5) TMI 946 - AT - Central Excise

Penalty u/s 11AC - storage of goods outside the factory u/r 4(4) of CER, 2002 - penalty imposed on the ground that appellant have admittedly cleared the accessories alongwith compressor without payment of duty for storage outside the factory therefore they have contravened the provisions - Held that - it is only due to inadvertence that the appellant could not mention storage of accessories alongwith compressor in their first application. However after filing letter dated 4-5-2007 the fact regarding the removal of accessories has been disclosed to the department. The demand is also within normal period of one year and therefore same is not covered under proviso to Section 11A(1) - penalty not imposable u/s 11AC and is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against penalty under Section 11AC for clearance of goods without permission.

Analysis:
The appellant sought permission to store goods outside factory premises due to space constraints. Initially granted permission for compressors only, later requested to include accessories. Department alleged clearance of accessories without permission. Show cause notice issued for duty demand and penalty under Section 11AC. Appellant admitted demand but challenged penalty imposition only. Commissioner upheld penalty. Appellant argued no intention to evade duty, disclosed facts to department, and demand within normal period. Revenue contended goods cleared without duty payment, justifying penalty.

The Tribunal found no intention to evade duty, as goods were cleared for storage with department's permission. The appellant informed the department about accessories clearance, albeit after initial permission. The subsequent permission included accessories, indicating inadvertence in the initial application. The demand fell within the normal one-year period, not invoking Section 11AC proviso. Consequently, the penalty under Section 11AC was deemed unwarranted due to no suppression of facts. The Tribunal set aside the penalty, modifying the impugned order accordingly and allowing the appeal.

The judgment emphasizes the importance of disclosing all relevant facts to the department, even if belatedly, to avoid allegations of suppression. It also highlights the significance of permissions granted by authorities and the inadvertent omissions that may occur in such processes. The decision underscores the necessity for penalties to be imposed judiciously, considering the circumstances of each case, especially when there is no intent to evade duties.