2010 (6) TMI 237 - AT - Central Excise

Penalty - the appellants cleared the CC rods without payment of duty against CT certificate and advance licences produced by the customers during the period May 2003 and June 2003. The buyers sold the goods in the open market resulting in evasion of duty to the extent of Rs. 4,78,570/-. Impugned order of the Commissioner (Appeals) vide which he has set aside the penalty on the respondent, Revenue has filed the present appeal. Held that in the absence of any mala fide on pat of the assessee, penalty provision not required to be invoked at all.

Summary

Issues involved:
1. Setting aside of penalty by the Commissioner (Appeals) against the respondent.
2. Interpretation of penalty provisions under Section 11AC of the Act.
3. Dispute regarding the imposition of penalty in absence of any mala fide on the part of the respondent.

Analysis:

Issue 1: Setting aside of penalty by the Commissioner (Appeals) against the respondent
The case involved an appeal by the Revenue against the Commissioner (Appeals) setting aside the penalty imposed on the respondent. The investigations revealed that the appellants cleared goods without duty payment against certificates and licenses produced by customers, resulting in duty evasion. The Commissioner (Appeals) upheld duty and interest but set aside the penalty. The Commissioner found that the appellants were not aware of any fraudulent activities by the consignee and had no reason to doubt the documents provided. The appellants' failure to obtain re-warehousing certificates was noted, but it did not indicate any malicious intent. Case laws were cited to support the decision to waive the penalty based on similar circumstances in other cases.

Issue 2: Interpretation of penalty provisions under Section 11AC of the Act
The Revenue argued that there was no option to reduce the penalty under Section 11AC of the Act, citing a Supreme Court case. However, the appellate authority found that no penalty was warranted in this case due to the lack of mala fide on the part of the respondent. The dispute was not about the quantum of penalty but the necessity of imposing any penalty at all. The Commissioner's decision was based on the absence of any malicious intent on the part of the respondent, leading to the conclusion that penalty provisions were not required to be invoked.

Issue 3: Dispute regarding the imposition of penalty in absence of any mala fide on the part of the respondent
The appellate authority upheld the Commissioner's decision to set aside the penalty, emphasizing that the appellant was not involved in any fraudulent activities and had suffered financial losses due to the situation. The lack of mala fide intent on the part of the appellant was a crucial factor in the decision to waive the penalty. The Revenue's appeal was rejected based on the clear findings that no penalty was necessary in this case.

In conclusion, the judgment highlighted the importance of considering mala fide intent when imposing penalties, as demonstrated in this case where the penalty was set aside due to the lack of evidence showing any malicious actions by the respondent.