2019 (3) TMI 785 - AT - Central Excise

Imposition of penalty u/s 11AC of Central Excise Act, 1944 - suppression of facts - Held that - Admittedly the respondent has paid the entire duty along with interest prior to the issue of show-cause notice and therefore, in view of the Section 11A(2) of the Central Excise Act, 1944 department should not have issued the show-cause notice as the proceedings are deemed to be concluded unless the Department can establish suppression of material fact with intent to evade payment of duty - In the present case, the department has not been able to bring any material on record to show that the appellant has suppressed the facts with intent to evade duty. Penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against imposition of penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
The appellant, engaged in manufacturing excisable goods, was found evading excise duty by underpaying on fully built vehicles. The valuation of goods was brought under Rule 10A of Central Excise Valuation Rules, 2000. A show-cause notice was issued demanding the differential duty, interest, and proposing penalty under Section 11AC. The Order-in-Original confirmed the demand and imposed penalty equivalent to the differential duty. The Commissioner (A) set aside the penalty, stating that payment of duty and interest before the demand notice precludes penalty imposition.

The Revenue contended that dropping the penalty is against the law, as the appellant knowingly evaded duty and suppressed facts to evade payment. The appellant argued that paying duty and interest before the notice entitles them to benefit under Section 11A(2) and there was no intent to evade duty. The issue of including the value of free chassis in assessable value was in dispute and pending before the apex court, hence no penalty should be imposed.

The Tribunal found that the appellant paid duty and interest before the notice, invoking Section 11A(2), which deems proceedings concluded unless there is evidence of suppression. As there was no proof of suppression, and the issue was a matter of interpretation under the Act, the penalty was unwarranted. Relying on precedent decisions, the Tribunal upheld the Commissioner's decision to set aside the penalty. The appeal by the Revenue was dismissed, affirming the Commissioner's order.