2021 (3) TMI 400 - AT - Central Excise

Levy of penalty u/s 11AC of the Central Excise Act, 1944 - default in payment of duty and and the payment is made along with applicable interest - intent to evade present or not - HELD THAT - There are no ingredient to evade payment of duty and all the transactions were carried out by the Department. Circumstances have to be kept in mind, which resulted in short payment of duty by the appellant. It has also been contended by the appellant that all the transactions were reflected in the monthly returns from time to time and therefore, the question of alleging fraud, mis-statement, suppression of facts etc. cannot be invoked. Besides, it is also on record that short payment occurred due to clerical error. The appellant was all along filing statutory returns and being pointed out, they paid the duty and interest without disputing the same. There was no intention on their part to evade payment of duty - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of short payment of Central Excise duty against the appellant.
2. Contesting penalty imposed under Section 11AC of the Central Excise Act, 1944.
3. Rejection of the appeal by the Commissioner (Appeals) leading to the present appeal before the Tribunal.

Analysis:

Issue 1: Allegation of short payment of Central Excise duty
The appellant, a large PSU, was issued a show-cause notice for alleged short payment of Central Excise duty for a specific period. The appellant acknowledged the default, paid the duty along with interest, and filed an appeal contesting the penalty imposed under Section 11AC. The appellant argued that the expenses in question were included in the transaction value, and there was no separate collection for COCO expenses. The adjudicating authority confirmed the demand due to non-production of invoices, despite the appellant's regular filing of statutory returns and payment of duty and interest, indicating no intent to evade payment.

Issue 2: Contesting penalty under Section 11AC
The appellant contested the penalty imposed under Section 11AC, citing compliance with statutory requirements, absence of misstatement or suppression of facts, and no intention to evade duty. The appellant relied on the decision of the Hon'ble Supreme Court in a relevant case to support their arguments. The Revenue reiterated the imposition of the penalty, stating that the short payment was discovered during an audit, leading to the penalty being rightfully imposed as per the lower authorities' orders.

Issue 3: Rejection of the appeal and Tribunal's decision
The Commissioner (Appeals) rejected the appellant's appeal based on the mandatory nature of penalty under Section 11AC, citing a judgment of the Hon'ble Supreme Court. However, the Tribunal, after hearing both sides and examining the records, found that the penalty imposed could not be sustained. The Tribunal referred to the Supreme Court's decision in another case to determine that in the absence of specific ingredients under Section 11AC and with no intent to evade duty, the penalty was not justified. Consequently, the Tribunal allowed the appeal, setting aside the penalty under Section 11AC of the Central Excise Act, 1944, in favor of the Appellant Company.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, the legal principles applied, and the final decision of the Tribunal, providing a comprehensive understanding of the case.