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2024 (5) TMI 666 - PUNJAB & HARYANA HIGH COURTLiability to pay fine and penalty under Rule 25(1)(b) of the Central Excise Rules, 2002 - Clandestine removal - Mens rea - existence of evidences or not - applicability of presumption of Section 11AC of CEA - HELD THAT:- Hon’ble Supreme Court in the case of Commissioner of Central Excise, Chandigarh Vs. Pepsi Foods Limited [2010 (12) TMI 15 - SUPREME COURT], held 'It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires "mens rea" as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible.' In view of the above decision of Hon’ble Apex Court ‘mens rea’ will play important role while invoking the provisions of Section 11 AC of the Central Excise Act, 1944. In the present case, the record shows that all the goods were accounted for, since the invoices with regard to the raw material and finished goods were there on record - Tribunal has totally ignored the documents produced before the Commissioner Appeals. As per Section 11AC of the Act, 1944, there should be an intention to evade the payment of duty and in the present case intention to evade the payment of duty is not proved by the authorities while passing the order of penalty - A perusal of the record shows that there was no intention to evade duty, which is requisite of Section 11AC of the Act. And Rule 25 of the Rules 2002 is not an independent rule and cannot be invoked unless it covers the ingredients to impose penalty as imposed in Section 11AC of the Act. So far as Rule 25 is concerned, it starts as “subject to the provisions of Section 11AC of the Act” which shows that Rule 25 would be applicable only in cases where Section 11AC is invoked. The impugned order is set aside - appeal allowed.
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