Ingredients of fraud, suppression necessary to impose penalty under section 11AC.

PJ/CASE LAW/2015-16/2845

Case:-COMMISSIONER OF C. EX., THANE-II VERSUS UNITED RUBBER INDS. (I) P. LTD.

Citation:-2014 (308) E.L.T. 724 (Tri. - Mumbai)

Brief Facts:-The Revenue is in appeal against the impugned order for dropping the penalty against the respondent under Rule 25 of the Central Excise Rules, 2002.The brief facts of the case are that on four occasions the respondent could not pay duty in time but they on their own paid the duty along with interest for the period they defaulted. Later on, a show cause notice came to be issued for imposition of penalty under Rule 25 of Central Excise Rules, 2002. The adjudicating authority confirmed the penalty of 30% of the duty involved. On appeal before the Commissioner (Appeals) he dropped the penalty on the premise that the provisions of Section 11AC of the Central Excise Act, 1944 were not invoked in the facts of the case which is prime condition for imposition of penalty. Aggrieved from the said order, Revenue is before Tribunal.

Appellants Contention:-Ld. AR submits that as respondent has defaulted the payment on four occasions, therefore they are habitual offenders and penalty under Rule 25 ibid is to be imposed. In the alternative, he submits that penalty under Rule 27 ibid could be imposed as per the decision of the Hon’ble High Court of Gujarat in the case of Saurashtra Cement Ltd.- 2010 (260) E.L.T. 71 (Guj.).

Respondents Contentions:-Heard the ld. AR. Perused the impugned order.

Reasoning Of Judgement:-The tribunal find that the ld. Commissioner (Appeals) dropped the penalty on the premise that provisions of Section 11AC of the Act have not been invoked. There is no finding of the lower authorities that the respondent has not paid the duty in time by way of fraud, collusion, misstatement, suppression of fact or contravention of provisions of Act/Rules with an intend to evade payment of duty, to invoke the provisions of Section 11AC of the Act. When these findings are not there, therefore the provisions of Rule 25 cannot be invoked. Further, the case law relied upon by the ld. AR for imposition of penalty under Rule 27 ibid relevant to the facts of this case. As in that case, the lower authorities imposed the penalty under Rule 25 ibid. But in this case, the penalty under Rule 25 ibid is dropped. Further, on perusal of the record, the tribunal find that there is no prayer in the appeal to impose penalty under Rule 27 ibid. Therefore, at this stage, the prayer for imposition of penalty under Rule 27 cannot be accepted. In these terms, they do not find any infirmity in the impugned order; the same is upheld. Appeal of the revenue is dismissed. Cross-objection is also disposed of in the above terms.

Decision:- Appeal dismissed.

Comment:- The gist of the case is that as the assessee have paid the duty along with the interest on his own account before issue of SCN and as such delay in payment of duty was not because of reason of fraud, collusion, misstatement, suppression of facts; henceforth the penalty provisions are not attracted.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2845

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