2016 (2) TMI 960 - AT - Central Excise

Levy of interest - imposition of penalty u/r 25 read with Section 11AC - the appellant was clearing the goods by paying duty on inputs and later on supplementary thereon was also paid - whether the levy of interest and penalty on intervening period justified? - Held that - u/r 25 of CER 2002 and read with Section 11AC a penalty is imposable on the assessee if it is a case of fraud collusion wilful mis-statement and suppression of facts for contravention of the provisions of Rules/Act with an intent to evade payment of duty. In the impugned order the Commissioner (Appeals) observed that no duty has been demanded and no allegation of mala fide intention has been established the allegations raised in the show cause notice are of technical nature and therefore reduced the penalty imposed on the appellant. In fact there is finding of the Commissioner (Appeals) that there is no allegation of mala fide intention or has not been challenged by the Revenue. In that circumstance no penalty is required to be imposed on the appellant. Therefore the impugned order imposing penalty is set aside - appeal is allowed.

Summary

Issues:
- Appeal against imposition of penalty under Rule 25 read with Section 11AC of Central Excise Act, 1944.

Analysis:

The appellant appealed against an order imposing a penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944. The case revolved around the appellant clearing goods by paying duty on inputs during 2011-12 to 2012-13, with supplementary duty also paid later. An audit revealed that the appellant was liable to pay interest for the period between actual clearance of goods and raising supplementary invoices. Subsequently, a show cause notice was issued to the appellant for interest appropriation and penalty imposition under Rule 25 read with Section 11AC. Both lower authorities upheld the interest appropriation and penalty imposition.

Upon hearing the parties and considering the submissions, it was noted that under Rule 25 of the Central Excise Rules, 2002, and Section 11AC, a penalty is applicable in cases involving fraud, collusion, wilful misstatement, or suppression of facts with the intent to evade duty payment. The Commissioner (Appeals) in the impugned order observed that no duty was demanded, and there was no evidence of mala fide intention. The allegations in the show cause notice were deemed technical in nature. The Commissioner (Appeals) reduced the penalty imposed on the appellant, noting that there was no challenge to the finding that there was no mala fide intention. Consequently, as there was no requirement for penalty imposition, the impugned order imposing the penalty was set aside, and the appeal was allowed.