2019 (9) TMI 1157 - HC - Central Excise

Imposition of penalty - Section 11-AC of Central Excise Act, 1944 - revenue neutral situation - assessee paid the tax demand along with interest prior to the issuance of SCN itself - Whether, on the facts and in circumstances of the case and in law, the Tribunal was correct in upholding penalty on the Appellant under Section 11-AC of the Act, 1944 since the confirmation of demand results in a Revenue neutral situation? - HELD THAT - This issue was not urged before the Tribunal as there were no facts on record to support the submission. Therefore, in the absence of any facts being on record to support the above legal submission, we are called upon to decide the issue in vaccum - this issue was not urged before the Tribunal. same does not gives rise to any substantial question of law - question not entertained. Whether, on the facts and in circumstances of the case and in law, the Tribunal was correct in upholding penalty on the Appellant under Section 11-AC of the Act, where the assessee paid the tax demand along with interest prior to the issuance of show cause notice itself? - HELD THAT - The penalty is imposable under Section 11-AC of the Act is a finding of fact arrived at by all the Authorities under the Act. This concurrent finding of fact is not shown to be perverse in any manner - the question does not give rise to any substantial question of law - question not entertained. Appeal dismissed.

Summary

Issues:
Challenge to order upholding penalty under Section 11-AC of the Central Excise Act, 1944.
Dispute over imposition of penalty despite prior payment of tax demand and interest.

Issue 1: Challenge to Penalty under Section 11-AC
The Appellant, engaged in manufacturing Special Purpose Machines (SPM), faced a show cause notice for under-valuation resulting in short payment of excise duty. The Jt. Commissioner confirmed the notice and imposed a penalty under Section 11-AC of the Act. The Appellant's appeal to the Commissioner of Central Excise (Appeals) was dismissed. The Tribunal upheld the penalty, citing intentional non-payment of tax and deliberate undervaluation based on evidence. The Tribunal rejected the argument that payment of duty and interest before the show cause notice absolves from penalty, reducing the penalty to 25% due to early payment. The Appellant challenged this decision.

Issue 2: Imposition of Penalty Despite Prior Payment
The Appellant contended that as the duty and interest were paid before the show cause notice, no penalty should be imposed. The Tribunal rejected this argument, citing intentional undervaluation and deliberate suppression of material value. The Tribunal noted that the Appellant had claimed CENVAT Credit for the free material but suppressed its value during assessment. The Tribunal upheld the penalty under Section 11-AC, finding no fault in the concurrent factual findings of the Authorities. The Appellant appealed this decision, arguing against the imposition of penalty despite early payment.

Conclusion:
The High Court dismissed the appeal, stating that the issues raised did not give rise to substantial questions of law. The Court noted that the arguments presented were not supported by facts before the Tribunal, leading to the rejection of the contentions. The Court upheld the Tribunal's decision on the imposition of the penalty under Section 11-AC, emphasizing the intentional undervaluation and suppression of material value by the Appellant.