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2016 (9) TMI 934 - CESTAT HYDERABADImposition or otherwise of penalty - Section 11AC of the Act - original adjudicating authority did not imposed the penalty under Section 11 AC on the appellant but in appeal to Commissioner (A), Comm. (A) imposed such penalty - Held that:- the reasoning adopted by the Commissioner (Appeal) to reinstate Sec. 11AC penalty are flawed. He has not given convincing grounds as to how he concludes that the qualifying ingredients for attracting Sec. 11AC have been satisfied, at the same time ignoring the submissions of the appellant on absence of mensrea and not disproving the detailed findings of the original authority. It is also to be noted that on query from the Department only, the Controller-Legal Metrology, Government of Andhra Pradesh vide letter dated 04-03-2009, clarified that the supplies to APHB is covered by the definition of Institutional consumers; that the sale is not retail and that printing RSP was not required. By this time, the appellant had already paid up the duty liability of ₹ 2,79,330/- along with interest three months earlier, in December, 2008. Yet, the Show Cause Notice was issued only in 18-01-2012. It is also not disputed that there was evident doubt on the applicability of Notification 4/2006 CE. The Honourable Apex Court has consistently held, in a number of land mark judgments, that when all facts were in the knowledge of the Department, or when there was genuine confusion on the leviability per se etc., penal provisions of Sec. 11AC cannot be imposed. For example in Pahwa Chemicals Pvt Ltd V/s CCE [2005 (9) TMI 92 - SUPREME COURT OF INDIA]. Even in the Rajasthan Spinning and Weaving Mills judgment [2009 (5) TMI 15 - SUPREME COURT OF INDIA], the Apex Court has laid down that penalty under Sec.11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the Section. Therefore, by respectfully following the ratio set out in the above judgments, I have no hesitation in holding that the impugned order as unsustainable and bad in law. - Decided in favour of appellant
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