2017 (10) TMI 785 - AT - Central Excise

Penalty u/s 11AC - duty along with interest has been paid by the assessee prior to issuance of SCN - Clandestine manufacture and removal - it was alleged that appellants have suppressed the facts regarding development/manufacture of said packaged software and its removal, with intent to evade payment of duty - Held that - the excise duty on the packaged software was introduced for the first time w.e.f. 01/03/2006 and the appellant had a bona fide belief that their software is not a packaged software and therefore is not liable to excise duty and that is why the excise duty was not paid - Further, the Department has not brought any evidence on record to show that there was suppression with intention to evade the payment of duty. In the case of CCE, Bangalore-I Vs. Geneva Fine Punch Enclosures Ltd. 2011 (1) TMI 746 - KARNATAKA HIGH COURT , Hon ble Karnataka High Court held that once the duty is paid along with interest before issuance of the SCN, then Revenue will not issue SCN. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Commissioner(Appeals) order
- Allegations of non-payment of duty on software
- Invocation of extended period of limitation
- Imposition of penalty under Section 11AC

Analysis:
1. Appeal against Commissioner(Appeals) order:
The appellant, a 100% EOU under the STPI scheme, provided CRM software solutions. An investigation by DGCEI revealed non-payment of duty on Talisma CRM software. The appellant paid duty and interest but was issued a show-cause notice proposing duty demand and penalty. The Commissioner(Appeals) upheld the order-in-original, leading to the present appeal.

2. Allegations of non-payment of duty on software:
The appellant contended that they paid duty upon notification by DGCEI, maintaining a belief that their software was not packaged and thus duty-exempt. They argued against invoking the extended period of limitation, citing lack of evidence of suppression to evade duty. Legal precedents were cited to support their stance.

3. Invocation of extended period of limitation:
The appellant argued that the duty paid prior to the show-cause notice issuance exempted them from penalty under Section 11AC. Precedents were cited to reinforce this argument, emphasizing that voluntary duty payment precludes penalty imposition.

4. Imposition of penalty under Section 11AC:
The Revenue contended that the appellant suppressed material facts and evaded duty, justifying the penalty. They cited a High Court decision supporting penalty imposition. However, the Tribunal found no evidence of intent to evade duty and ruled in favor of the appellant, setting aside the penalty.

In conclusion, the Tribunal found in favor of the appellant, emphasizing the lack of evidence of suppression or intent to evade duty. They referenced legal precedents supporting the appellant's position on penalty exemption post-duty payment. The impugned order was deemed unsustainable, leading to the appeal's allowance with consequential reliefs.