2017 (10) TMI 12 - AT - Central Excise

100% EOU - Debonding of unit - non-declaration of stock - Section 11 AC of the Central Excise Act, 1944 - Held that - Perusal of the provisions of Section 11 AC ibid reveals that the said provision can be invoked in the eventually, when the duty has not been paid due to the reason of fraud, suppression etc. Since, the onus to prove suppression etc. entirely lies with the Department, which in the present case, has not been discharged with the help of any tangible evidence, the imposition of penalty under Section 11 AC ibid cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order passed by Commissioner, Central Excise (Appeals), Jaipur
- Imposition of penalty under Section 11 AC of the Central Excise Act, 1944

Analysis:
1. The appellant, a 100% EOU engaged in manufacturing Cotton and Yarn, was de-bonded into a DTA unit after approval from the Development Commissioner. The Central Excise Department calculated duty payable by the appellant on goods, which was deposited by the appellant. Subsequently, it was discovered that certain goods procured duty-free were not declared by the appellant. Show Cause Proceedings were initiated, resulting in confirmation of duty demand and imposition of penalty by the Commissioner (Appeals).

2. The appellant argued that the disputed goods were procured indigenously under CT-3 certificate, and the duty amount along with interest was deposited suo moto upon detection of the mistake. The appellant contended that there was no suppression or fraud, hence Section 11AC penalty should not apply. Reference was made to a previous adjudication order where proposed penalty was dropped.

3. The Revenue, represented by the ld. DR, supported the findings in the impugned order, upholding the penalty under Section 11AC. The Tribunal examined the case records and provisions of Section 11AC, which stipulate penalty for non-payment of duty due to fraud, suppression, or willful misstatement.

4. The Tribunal noted that the provision of Section 11AC can be invoked when duty is not paid due to fraud or suppression. The appellant had voluntarily paid the duty upon discovering the omission, without evidence of fraud or suppression by the Department. As the Department failed to prove suppression, the imposition of penalty under Section 11AC was deemed unsustainable.

5. Consequently, the Tribunal set aside the impugned order's penalty under Section 11AC, allowing the appeal in favor of the appellant. The decision was pronounced in the open court on 08.09.2017 by Mr. S.K. Mohanty, Member (Judicial) of the Appellate Tribunal CESTAT NEW DELHI.