2017 (9) TMI 1475 - AT - Central Excise

Penalty u/s 11AC of CEA, 1944 - short levy/non levy - captive consumption - Held that - Section 11AC of the Act, 1944 provides penalty for short levy or non-levy of duty in certain cases, where any duty of excise has not been levied or paid by reason of fraud or collusion or any willful mis-statement or suppression of facts with an intent to evade payment of duty etc - In the present case, there is no ingredient as specified in Section 11AC for imposition of penalty. The mere failure to mention the Notification No. in ER-1 Return, cannot be treated as suppression of fact with an intent to evade payment of duty unless, there are other materials available on record - penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under section 11AC of the Central Excise Act, 1944 for non-disclosure of facts related to captive consumption of Motor Spirit under Notification No.67/95-CE dated-16/03/1995.

Analysis:
The appellant, engaged in manufacturing excisable goods, cleared Motor Spirit for captive consumption under a specific notification but failed to mention it in the ER-1 Return. A show cause notice was issued, leading to the imposition of duty, interest, and penalty equal to the duty amount. The Commissioner (Appeal) upheld the penalty, citing non-disclosure of facts. However, the Tribunal disagreed, stating that Section 11AC requires fraud or suppression of facts to impose a penalty. The Tribunal referenced the Uniworth Textiles Ltd. case, emphasizing that suppression entails deliberate non-disclosure to evade duty. As the duty and interest were paid before the notice, penalty under Section 11AC was deemed unwarranted. Instead, a general penalty of ?10,000 was imposed for the contravention of the law, and the appeal was allowed.

In conclusion, the Tribunal overturned the penalty imposed under Section 11AC due to the absence of deliberate suppression of facts and the early payment of duty and interest. A general penalty was levied for the contravention, emphasizing the distinction between intentional evasion and inadvertent omission in tax matters.