2024 (6) TMI 578 - AT - Central Excise

Levy of penalty u/s 11AC of the Central Excise Act, 1944 - duty paid before issuance of SCN - existence of mens rea or not - fatty acid / waste - by-product - HELD THAT - It is observed that immediately on pointing out the short payment of duty, the appellant have voluntarily paid the duty along with interest, before issue of the Show Cause Notice. Thus, the provisions of sub-section 2B of Section 11A is applicable in this case. It is also observed that even when the appellant was not paying duty on the waste fatty acid, they have filed E.R.-1 returns regularly intimating the duty payment details. Thus, there are no suppression of fact with intention to evade payment of duty exists in this case. Accordingly, the penalty under Section 11AC is not imposable in this case and hence the penalty imposed on the appellant under Section 11AC of the Central Excise Act, 1944 is set aside. Quantum of duty liability - HELD THAT - There is a difference between the duty liability determined by the appellant and the duty liability calculated by the Department - even though the appellant accepted the duty liability, the ld. adjudicating authority contended that there was a short payment of Rs.17,770/-. However, the appellant insists that as per their calculation, they have rightly paid the differential duty and there is no short payment. If the adjudicating authority finds that there is a short-payment of duty by the appellant, then the appellant should pay the differential duty along with interest. Since there is no suppression of fact involved with intention to evade payment of duty exist in the present case, no penalty is imposable on the appellant even if there is a differential duty payable by the appellant over and above the amount of duty already paid by them. Accordingly, the matter is remanded to the adjudicating authority only for the limited purpose of quantification of the differential duty liability, if any, payable by the appellant, along with interest. Petition allowed by way of remand.

Summary

Issues involved: The judgment deals with the imposition of penalty on the appellant for non-payment of duty on fatty acid/waste, the applicability of Section 11AC of the Central Excise Act, 1944, and the quantification of duty liability.

Imposition of Penalty: The appellant, a manufacturer of 'Refined Palm Oil', initially paid duty on the fatty acid/waste generated. Upon learning that duty was payable on the waste fatty acid, they paid the duty along with interest before a Show Cause Notice was issued. The Tribunal found no mens rea to evade payment of duty and held that penalty under Section 11AC was not imposable due to the voluntary payment before the notice was issued.

Applicability of Section 11AC: The appellant argued that as per Sub-section 2B of Section 11A, if duty along with interest is paid before the Show Cause Notice, no penalty should be imposed. The Tribunal agreed, noting the appellant's prompt payment upon being informed of the duty shortfall and the regular filing of duty payment details, concluding that no intention to evade payment existed.

Quantification of Duty Liability: Despite the appellant's payment, a discrepancy in duty liability calculation arose between the appellant and the Department. The Tribunal remanded the matter to the adjudicating authority to determine the correct duty payable by the appellant based on their calculation. If any differential duty is found, the appellant must pay it along with interest, but no penalty will be imposed due to the absence of intentional evasion.

The Tribunal set aside the penalty, remanded the matter for quantification of any differential duty, and emphasized that no penalty would be imposed on the appellant.