2013 (6) TMI 413 - HC - Central Excise

Penalty u/s 11AC - no allegation with supporting evidence regarding suppression of facts, misdeclaration, fraud or collusion, etc. - Held that - Tribunal was perfectly justified in observing that even in the show cause notice there were no allegations that the duty was short-levied or short paid on account of suppression of facts, misdeclaration, fraud, collusion, etc. Section 11AC of the Central Excise Act permits the Authorities to collect penalty if any duty of excise has not been levied or paid or short levied or short paid or erroneously refunded by reason of fraud, collusion, or wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty. - No penalty

Summary

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act.
2. Justification of penalty deletion by the Tribunal.
3. Allegations of suppression of facts, misdeclaration, fraud, collusion in the show cause notice.

Analysis:
The High Court was presented with an appeal by the Revenue against the Tribunal's judgment regarding the imposition of a penalty under Section 11AC of the Central Excise Act. The questions raised for consideration included the justification of the Tribunal's decision in not imposing the penalty due to the absence of allegations related to suppression of facts, misdeclaration, fraud, or collusion in the show cause notice. The Tribunal's deletion of the penalty was based on two primary grounds. Firstly, the absence of any allegations in the show cause notice regarding suppression of facts led the Tribunal to conclude that the penalty under Section 11AC could not be imposed. Secondly, the Tribunal noted that the issue had not attained finality until a specific order was passed on a later date, after the penalty proceedings had commenced.

The Counsel for the Revenue argued that the issue had not reached finality before, and thus, the Tribunal's decision was erroneous. However, the High Court found that the Tribunal's decision was justified as the show cause notice lacked allegations of any duty being short-levied or short-paid due to suppression of facts, misdeclaration, fraud, or collusion. Section 11AC allows for penalty imposition in cases involving fraud, collusion, wilful misstatement, or suppression of facts to evade duty payment. Upon reviewing the Tribunal's order and the show cause notice, the High Court found no mention of any of these factors. Consequently, the Tribunal's deletion of the penalty was deemed appropriate, leading to the dismissal of the Tax Appeal.