2018 (5) TMI 308 - HC - Central Excise

Penalty u/s 11AC - case of appellant is that because the appellant assessee had deposited the entire duty with interest even before receipt of SCN, Section 11AC of the Act would not be attracted - Held that - it is evident that the appellant assessee had entered fake Challan nos. in the ER-1 return which could be noticed by the department and only thereafter when a telephonic message was received by the department assessee, he deposited the entire amount of duty with interest, etc. The Tribunal, which is the apex fact finding body, has recorded this finding, based on the materials which were available on the record, and this is a pure question of fact and we cannot go into the question of facts at this stage in this appeal - appeal dismissed.

Issues:
1. Appeal under Section 35G of The Central Excise Act, 1944 against imposition of penalty under Section 11AC.
2. Allegation of suppression of fact or misstatement in ER-1 return.
3. Payment of duty under protest before receipt of show cause notice.
4. Interpretation of Section 11AC regarding imposition of penalty.
5. Tribunal's findings as the apex fact-finding body.
6. Absence of substantial question of law in the case.

Analysis:
1. The appeal was filed against the order upholding the penalty imposed under Section 11AC of The Central Excise Act, 1944. The Tribunal affirmed the adjudicating authority's decision regarding the penalty amounting to ?8,47,131. The appellant contended that there were substantial questions of law involved, arguing that the anomaly in the GAR-7 particulars was due to staff error, not intentional evasion of duty.

2. The appellant's counsel emphasized that the duty payment discrepancy in the ER-1 return was not a deliberate act to evade payment. It was highlighted that the duty, interest, and penalty were promptly deposited upon receiving a telephonic message from the department. The counsel pointed out that the appellant had paid the penalty under protest, disputing the misstatement allegation.

3. The Tribunal considered the Commissioner's appeal, rejecting the appellant's argument that the staff's error led to the false Challan numbers in the ER-1 return. The Tribunal viewed it as willful misstatement, justifying the penalty under Section 11AC. However, it deemed other penalties excessive due to the Section 11AC penalty imposition. The Tribunal upheld the penalty under Section 11AC based on the adjudicating authority's order.

4. During the hearing, the appellant's counsel contended that since the duty was paid in full with interest before receiving the show cause notice, Section 11AC should not apply. The court reviewed Section 11AC but upheld the Tribunal's finding that the appellant entered false Challan numbers before rectifying the error upon departmental notification.

5. The court acknowledged the Tribunal's role as the primary fact-finding body and upheld its findings based on the available record materials. It noted that the issue of false Challan numbers in the ER-1 return was a factual matter beyond the scope of the current appeal, emphasizing the Tribunal's determination on the matter.

6. Ultimately, the court found no substantial question of law in the case and dismissed the appeal, stating it lacked merit. The judgment affirmed the Tribunal's decision regarding the penalty under Section 11AC, concluding the legal proceedings in the matter.

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