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2014 (5) TMI 527 - HC - Central ExcisePenalty u/s 11AC - whether the assessee would be absolved from the liability to pay interest and penalty in view of their payment of differential duty before the issuance of show cause notice - Held that:- Section 11AB deals with interest on delayed payment of duty. Similarly Section 11AC deals with penalty for short-levy or non-levy of duty in certain cases. Both these provisions indicate that in case the duty has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Central Excise Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay penalty equal to the duty so determined. The assessee is also liable to pay interest for the period in question. Inspection was conducted on 19th August, 2000. The assessee paid the differential duty on 22nd August, 2000. The show cause notice was issued only on 20th February, 2004. In spite of payment of the entire duty amount even before issuance of show cause notice, and in fact within three days of inspection, the Original Authority imposed penalty equal to the duty amount determined - When the assessee is having the benefit of payment of penalty at 25% of the duty determined, in case the duty is paid within a period of thirty days after the issuance of show cause notice, it is beyond logic as to why they should not be given the indulgence to pay penalty at 25%. The prompt payment of duty after pointing out suppression and before issuance of show cause notice cannot be taken as a negative factor against the assessee to claim penalty at 100%. In case, the penalty is paid even before issuance of show cause notice, necessarily, the assessee should be given the benefits of the first proviso to Section 11AC of the Act. - Penalty reduced to 25% - Decided partly in favour of Revenue.
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