2016 (12) TMI 1683 - AT - Central Excise

Penalty u/s 11AC - Default in monthly payment of duty - contravention of the provisions of Rule 8(3A) of the Central Excise Rules 2002 - Held that - this is not a case of clandestine removal or the case of non-payment or short payment of duty. Moreover there is no suppression of fact on the part of the appellant - Whatever default was made by the appellant that it is not amount to intentional evasion of duty particularly for the reason that they have disclosed the duty payable amount in their invoices as well as in the return - penalty set aside - appeal allowed.

Summary

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act, 1944 for default in monthly payment of duty.

Analysis:
The appellant defaulted in the monthly payment of duty for June 2010, which was discharged later. A show cause notice was issued for demanding duty for a specific period. The adjudicating authority dropped the demand as most of the duty was paid before the notice. A penalty was imposed under Rule 25 of Central Excise Rules, 2002, and the Revenue appealed for a higher penalty under Section 11AC. The Commissioner (Appeals) allowed the appeal, imposing a penalty equal to the demanded duty. The appellant contested, arguing it was not a case of non-payment or short payment, and Section 11AC should not apply as there was no intention to evade duty.

The appellant's counsel contended that the case involved a mere default in timely duty payment, not clandestine removal. The duty for June 2010 was declared in the ER1 return, and the subsequent show cause notice was based on this declaration. The duty was paid, and there was no intention to evade duty, hence Section 11AC should not be invoked. The counsel cited relevant judgments to support this argument.

The Revenue's representative reiterated the findings of the impugned order, supporting the imposition of the penalty under Section 11AC. The Tribunal carefully considered both sides' submissions and found that the case indeed involved a default in the duty payment on the due date. The duty payable for June 2010 was declared in the ER1 return, indicating no intention to evade duty. There was no suppression of facts by the appellant, and the default did not amount to intentional evasion. Therefore, the Tribunal concluded that the penalty under Section 11AC was not justified and set it aside, allowing the appeal with consequential relief.