2004 (4) TMI 401 - AT - Central Excise

Summary

Issues:
Challenge to imposition of penalty under Section 11AC of the Central Excise Act.

Analysis:
The case involved the challenge to the imposition of a penalty of Rs. 1,71,077 on the appellants for crossing the limit of clearance provided under the Small Scale Exemption Notification. The appellants, engaged in the manufacture of Latex Foam products, voluntarily informed the Revenue Department about the excess clearance and deposited Rs. 3,52,285. Subsequently, the Revenue issued a show cause notice demanding Rs. 4,51,185 for the goods cleared over and above the exemption limit. The appellants accepted the demand and paid the entire duty amount.

The appellants argued that their voluntary deposit of Rs. 3,52,285 demonstrated no intention to evade duty, especially since the show cause notice was issued almost a year after they informed the Department and paid the duty. On the other hand, the Revenue contended that the total duty payable was Rs. 4,51,185, and the appellants had not deposited the entire amount.

The Tribunal analyzed the facts and found that the appellants had indeed deposited Rs. 3,52,285 on their own initiative, which was not disputed by the Revenue. The show cause notice was issued only after the appellants informed the Department and paid the duty. Considering these circumstances, the Tribunal concluded that there was no mens rea on the part of the appellants to evade duty. Therefore, the imposition of penalty under Section 11AC of the Central Excise Act was deemed unsustainable and was set aside. Consequently, the appeal was allowed in favor of the appellants.