Imposition of Penalty under Section 11Ac of CEA, 1944

PJ/Case Laws/2011-12/1481

Imposition of Penalty under Section 11Ac of CEA, 1944 - sustainability of

Case: M/s MUSA & CO Vs CCE, KOLKATA-III

Citation: 2009-TIOL-294-CESTAT-KOL

Issue:- Goods removed without payment of duty on a particular day - Fact found by Revenue Authorities on same day - Such goods suffered duty on same day - whether penalty under Section 11AC of Central Excise Act, 1944 imposable?

Appellant’s Contention:- Appellant submits that unless duty is determined under Section 11A(1) of the Central Excise Act, 1944, there shall not be penalty because the duty was not determined under Section 11A(2) of the said Act. He submits that factually when the Excise Authorities intercepted and found the goods were removed without payment of duty, immediately the Appellant deposited the duty on the spot.

He submits that for such reason the Adjudicating Authority held that there shall be no recovery of duty since that has already been paid. Imposition of penalty by Appellate Authority against the Appeal of the Department was uncalled for under law in terms of provisions contained in Section 11AC of the Central Excise Act, 1944.

He prays that Section 11AC may be read with Section 11A(2) of the Central Excise Act, 1944. If it is so read, the Appellant shall be exonerated from penalty. He therefore argues that the penalty confirmed by learned Appellate Authority below is erroneous.

Respondent’s Contention:- The Revenue submits that learned Appellate Authority below correctly held the issue that dropping of penalty by the Adjudicating Authority was erroneous. Therefore the Appellate Order should not be interfered.

Reasoning of Judgment:- There is no dispute that duty was paid on the spot after removal but not at the time of removal. The duty having been paid there was no determination done under Section 11A (2) of the Central Excise Act, 1944. As that has not been done, Section 11AC of the said Act does not call for levy of penalty of equal amount of duty. This is because of the specific provision laid down under Section 11AC to the effect that the person who is liable to pay duty as determined under Sub-Section (2) of Section 11A shall only become liable to penalty. This intention of exonerating from penalty is also getting support from the first proviso which has made provision for concessional penalty.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1481

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