2005 (8) TMI 120 - HC - Central Excise

Summary

Issues involved: Interpretation of Section 11A of Central Excise Act, applicability of Section 2B to Section 11A, imposition of penalty under Section 11AC, validity of show cause notice for penalty.

Summary:

Issue 1: Interpretation of Section 11A of Central Excise Act
The Tribunal interpreted Section 11A of the Central Excise Act and held that duty demand on a specific date was not required due to the insertion of Section 2B to Section 11A on a prior date. The Tribunal also concluded that invoking the penalty clause of Section 11AC was not necessary. The appeal raised questions on the correctness of this interpretation.

Issue 2: Applicability of Section 2B to Section 11A and Penalty Imposition
The question arose whether sub-section (2B) of Section 11A applied in a case where the assessee was involved in clandestine removal. Despite a detailed Show Cause Notice indicating an intention to evade duty payment, the absence of specific section/provision reference in Section 11A was debated regarding the validity of imposing penalties under Section 11AC of the Central Excise Act, 1944.

The factual matrix revealed that the show cause notice was issued after the entire duty and penalty amounts had already been paid. The respondent's counsel cited judgments from the Madras and Karnataka High Courts, supporting the view that if duty or penalty was paid before the issuance of a show cause notice under Section 11AC, no further action under that section should be taken.

Additionally, it was noted that a similar view had been upheld by the Tribunal at Bangalore, which was subsequently accepted by the Apex Court after an appeal. Consequently, the Court found no substantial question of law in the appeal and dismissed it accordingly.

In light of the dismissal of the appeal, the respondent's counsel did not pursue the cross-objection filed by the respondent, leading to its dismissal as well.