2015 (11) TMI 773 - AT - Central Excise

Levy of penalty - Denial of exemption claim - duty demand u/s 11A - SSI Exemption - Notification No.8/2003 dt. 01/03/2003 - Held that - Revenue has not challenged the reasoning advanced by Commissioner(Appeals) and has not rebutted the said findings. The appellate authority has set aside the penalty on the respondent on the ground that as per their letter dt. 10/01/2007, it was the respondent himself who disclosed all the facts and subsequently deposited the duty. As per the order of the appellate authority, Revenue has not placed any evidence on record to indicate that it was as a result of investigations that the assessee s lapse came on record. In the present appeal also, the Revenue has not referred to any evidence to show such an action on the part of the Revenue. The assessee having deposited the entire duty along with interest prior to the issuance of the show-cause notice, cannot be said to have not paid the said duty by way of any malafide intention. In fact in such a scenario, the provisions of Section 11(2) provide that no show-cause notice should be issued to the assessee. As such, I find no infirmity in the view of the Commissioner(Appeals). - there was no malafide intention on the part of the assessee inasmuch as the assessee has himself detected the mistake and has deposited the differential duty along with interest much before the issuance of the show-cause notice, the imposition of penalty of ₹ 10,000/- in terms of the provisions of Rule 25 of Central Excise Rules, which stands upheld by the Commissioner(Appeals) is not justified. - Decided in favour of assessee.

Summary

Issues:
1. Penalty imposition on the assessee under Central Excise Act.
2. Challenge to penalty imposition by the Revenue.
3. Legal liability for exceeding exemption limit and duty payment.
4. Applicability of Section 11AC for penalty imposition.
5. Disclosure of facts by the assessee and penalty imposition.

Detailed Analysis:
1. The case involved an appeal by the Revenue against the setting aside of a penalty imposed on the assessee under the Central Excise Act. The assessee, engaged in manufacturing modular workstations, availed SSI exemption but exceeded the limit, leading to duty payment obligations. The Revenue initiated proceedings based on intelligence and issued a show-cause notice for duty confirmation, interest, and penalties.

2. The Commissioner(Appeals) set aside the penalty on the assessee after considering their voluntary duty payment before the notice. However, penalties on the Managing Director and an employee were upheld. The Revenue appealed, arguing that the duty liability was admitted, justifying penalty imposition under Section 11AC.

3. The appellate authority found no evidence of malafide intent by the assessee, as they self-reported the error and paid the duty promptly. The Revenue failed to demonstrate any investigation leading to the detection of the lapse. Citing Section 11(2), the authority upheld the Commissioner's decision, emphasizing the absence of grounds for penalty imposition.

4. Reference was made to a similar case by the Chhattisgarh High Court, where penalty imposition under Section 11AC required evidence of intent to evade duty payment. Since no such evidence was presented by the Revenue in this case, the penalty was deemed unwarranted, aligning with the decision to set aside the penalty on the assessee.

5. Ultimately, the Tribunal rejected the Revenue's appeal and allowed the assessee's appeal, emphasizing the lack of malafide intent, the voluntary duty payment, and the absence of grounds for penalty imposition. The penalty under Rule 25 was also set aside, concluding the case in favor of the assessee.