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2024 (6) TMI 903 - AT - Central ExciseIssues Involved: 1. Whether penalty under Section 11AC of the Central Excise Act, 1944 is applicable in the case of non-payment of duty due to fraud, collusion, misstatement, or suppression? 2. Whether imposition of penalty under Section 11AC requires prior determination of duty under Section 11A(2) of the Central Excise Act, 1944? Summary: Issue 1: The appellant, engaged in manufacturing TV sets, did not load amortization cost of moulds supplied by another company for TV parts. Upon audit observation, differential duty was paid along with interest, and a waiver of show-cause notice was requested. However, a show-cause notice proposing penalty under Section 11AC was issued, citing non-applicability of waiver due to fraud or suppression. The appellant argued that since duty was not confirmed, penalty under Section 11AC should not apply, citing relevant case laws. The Commissioner upheld the penalty, stating Section 11AB Explanation 1 justifies the penalty. Issue 2: The Tribunal found that the duty amount was paid voluntarily before the issuance of the show-cause notice, and duty was not determined under Section 11A(2) as required by Section 11AC. Citing precedents, including Commissioner vs. Geneva Fine Punch Enclosures Ltd., it was held that determination of duty is a prerequisite for imposing penalty under Section 11AC. As the duty was paid before the notice and not determined thereafter, the penalty was deemed inapplicable. The order imposing penalty under Section 11AC was set aside, and the appeal was allowed based on the absence of duty determination post-payment. In conclusion, the Tribunal ruled that penalty under Section 11AC cannot be imposed without prior determination of duty under Section 11A(2) and that payment of duty before the show-cause notice precludes penalty imposition. The impugned order imposing penalty was set aside, and the appeal was allowed.
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