Penalty under Section 11AC

PJ/Case Laws/2011-12/1363

Penalty under Section 11AC - Imposition of

Case: UNION OF INDIA v/s V.E. COMMERCIAL VEHICLES LTD.

Citation: 2011 (270) E.L.T. 145 (S.C.)

Issue:- Whether penalty under Section 11AC for intention to evade payment of duty, can be waived on the ground that assessee deposited duty before issuance of show cause notice?

Brief Facts:- Appellant paid the duty prior to the issuance of the show cause notice. After issuance of show cause notice, mandatory penalty under Section 11AC proposed to be imposed.

In appeal before the High Court, Revenue sought imposition of penalty under Section 11AC. The High Court dismissed the appeal after making an observation that there was no intention to evade duty on the part of assessee-respondent. It was also held that since the duty was paid by the assessee prior to the issuance of the show cause notice, no penalty is leviable on the said assessee under Section 11AC of the Central Excise Act.

Against the same, Revenue preferred appeal before the Supreme Court.

Appellant’s Contention:- Revenue contended that the conclusions of the High Court that there is no evidence adduced or brought on record by them against the assessee to show their mischievousness or concealed approach to evade payment of duty is perverse and not borne out of the records. Further it was submitted that only because the assessee deposited the duty before the issuance of the show cause notice and because there was some doubt about the payment of duty on the goods, therefore, in such cases, there cannot be any imposition of penalty on the assessee, cannot be accepted as correct law as such findings are against the law laid down by this Court in Union of India v. Rajasthan Spinning & Weaving Mills [2009 (238) E.L.T. 3 (S.C.)].

Respondent’s Contention:- Respondent argued that in the aforesaid decision also, namely, Rajasthan Spinning & Weaving Mills, the Supreme Court has remanded back the matter to the High Court for fresh consideration of the issue in the light of the evidence available on the record.

Reasoning of Judgment:- The Supreme Court held that findings recorded by the High Court in the impugned judgment and order and the conclusion arrived at thereto are contrary to the decision of this Court in Rajasthan Spinning & Weaving Mills, as also the evidence that is available in the nature of the show cause notice, reply submitted and the findings arrived at by the Adjudicating Authority. Those findings and the evidence on the record should have been considered and appreciated by the High Court. Despite the availability of such evidence on record, the High Court was not justified to hold that there was no evidence adduced or brought on record in support of contention that there was no malice clandestine approach to evade payment of duty. The findings are without appreciation of the evidence available on record.

Decision:- Matter remanded.

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PJ/Case Laws/2011-12/1363

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