Every default in payment of duty does not gives rise to penalty under section 11AC.

PJ/Case law/2012-13-1546

Case:-COMMSSIONER OF CENTRAL EXCISE, KOLKATA-VII VERSUS IDEAL-COM FAB (P) LTD.

Citation:- 2013 (290) E.L.T. 246 (TRI-KOLKATA)

Issue:-Every default in payment of duty does not gives rise to penalty under section 11AC.

Brief facts:-The case are that the respondents are engaged in the manufacture and sale of Crucible for Induction Furnace by fabricating materials like plates, angles, channels, joints and fitting materials etc. falling under Chapter 73 of Central Excise Tariff Act, 1985. The department initiated proceedings against them for default of payment of duty for the period from April, 2009 to November, 2009 and demanded duty of Rs. 3,68,171/- and there was proposal for penalty under Rule 25 and Section 11AC. Lower adjudicating authority confirmed the proposal in the show cause notice. Aggrieved by the same, the respondents filed appeal before ld. Commissioner (Appeals), who upheld the lower adjudicating authority’s order except imposition of penalty under Section 11AC. Hence, the revenue is in appeal before the Tribunal.

Appellant’s Contention:- The Appellant submitted that it was categorically indicated in the show cause notice that the said assessee deliberately violated the provisions of the said rules and availed undue benefit in the process and it was with a mala fide intention to evade payment of duty. In such factual background the lower adjudicating authority has correctly imposed penalty under Section 11AC whereas the ld. Commissioner (Appeals) has not imposed penalty under Section 11AC on the ground that it was not a case of suppression of fact and accordingly no penalty can be imposed under Section 11AC.

Respondent's Contention:-The responded pleaded that the order of the Commissioner Appeals as regards non imposition of penalty is correct and the same should be upheld.

Reasoning of Judgment:-Considering the submissions of ld. AR and perused the records. Undisputedly the entire proceedings began on account of default of payment of duty for the period from April, 2009 to November, 2009. Ld. Commissioner set aside penalty imposed under Section 11AC of Central Excise Act, 1944. Revenue is in appeal against the same. While setting aside the penalty ld. Commissioner, in his order, has found as under:-

“SCN issued relating to default in payment of duty for the month of April’09 to Nov’09. Now, regarding violation of Rule 8(3A) of the Rules, I find that Rule 8(3A) of the Rules states that if assessee defaults in payment of duty beyond thirty days from the due date, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow. I find that it is not a case of suppression of fact with intent to evade payment of duty. Penalty under Sec. 11AC of the Central Excise Act, 1944 is imposable for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the Sec. 11AC of the CEA’44. I do not find employment of any of the means mentioned in the Sec. 11AC of the CEA’44 in the context of the present case. Hence there is no question of penalty under Sec. 11AC of the Act. However, appellant in this case is liable for penalty under Rule 25(1)(a) of the Rules for violation of Rule 8(3A) of the Rules. I find that adjudicating authority has already imposed penalty of Rs. 95,000/- and I find no reason to interfere”.

Undisputedly entire proceedings were as per Rule 8 and penalty is leviable as per the provisions of Rule 8(3A) which does not provide for penalty under Section 11AC. From the above it is clearly evident that the said Rules does not provide penalty under Section 11AC of Central Excise Act, 1944. Thus the appeal filed by Revenue is without any merit and the same is accordingly dismissed

Decision:- Appeal Dismissed.

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PJ/Case law/2012-13-1546

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