Whether penalty under section 11AC is automatic?

PJ/CASE LAW/2015-16/2811

Case:-COMMR. OF CUS. & C. EX., HYDERABAD-III VERSUSRAVI TEJA PROCESSORS

Citation:- 2015 (323) E.L.T. 306 (A.P.)

Brief Facts:-This appeal is filed against the decision of the Tribunal wherein the learned Tribunal has found that the pre-condition for imposition of penalty has not been satisfied.

Appellants Contention:-Learned Counsel for the appellant submits that the imposition of penalty under Section 11AC of the Act is automatic.

Respondents Contention:- None appeared for the respondent.

Reasoning of Judgement:-This Court is not going to appreciate this fact-finding. Imposition of penalty under Section 11AC of the Central Excise Act, 1944 (for short “the Act”) is not automatic and it has to be applied when the conditions mentioned in sub-section (1) of the Act are fulfilled. We set out Section 11AC of the Act as follows :
“11AC. Penalty for short-levy or non-levy of duty in certain cases: (1) The amount of penalty for non-levy or short-levy or non-payment or short payment or erroneous refund shall be as follows :-
(a) where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud or collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (10) of Section 11A shall also be liable to pay a penalty equal to the duty so determined;
(b) where details of any transaction available in the specified records reveal that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded as referred to in sub-section (5) of Section 11A, the person who is liable to pay duty as determined under sub-section (10) of Section 11A shall also be liable to pay a penalty equal to fifty per cent of the duty so determined;
(c) where any duty as determined under sub-section (10) of Section 11A and the interest payable thereon under Section 11AA in respect of transactions referred to in clause (b) is paid within thirty days of the date of communication of order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty-five per cent of the duty so determined only in a case where the penalty is paid within the period so specified;
(d) where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10) of Section 11A, then, the amount of penalties and interest payable shall stand modified accordingly and after taking into account the amount of duty of excise so modified, the person who is liable to pay duty as determined under sub-section (10) of Section 11A shall also be liable to pay such amount of penalty or interest so modified.
Explanation. - For the removal of doubts, it is hereby declared that in a case where a notice has been served under sub-section (4) of section 11A and subsequent to issue of such notice, the Central Excise Officer is of the opinion that the transactions in respect of which notice was issued have been recorded in specified records and the case falls under sub-section (5), penalty equal to fifty per cent of the duty shall be leviable.
(2) Where the amount as modified by the appellate authority or Tribunal or court is more than the amount determined under sub-section (10) of Section 11A by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority or Tribunal or court in respect of such increased amount.”
From the provisions of law, it does not support the contention of the learned Counsel for the appellant as it is clear therefrom preconditions mentioned therein have to be fulfilled. Therefore, the tribunal does not find any reason to interfere with the judgment and order of the learned Tribunal. Accordingly, this appeal is dismissed. Miscellaneous petitions pending, if any, shall also stand closed. No order as to costs.

Decision:-Appeal dismissed.

Comment:- The crux of the case is that the penalty imposed vide Sec 11AC is not automatic and the same is being imposable on fulfilment of certain pre-conditions which are specified in the said section. Penalty under section 11AC could not be imposed for every short payment/non-payment unless and until the ingredients specified for its imposition are being fulfilled.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2811

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