2019 (3) TMI 1793 - AT - Central Excise

Imposition of penalty u/s 11AC of CEA - manufacture of paint brush - change in the rate of duty through issuance of various notifications - appellant continued to clear their goods at nil rate of duty as was without knowledge of changes in rates - duty along with interest deposited on being noticed - HELD THAT - Admittedly Revenue has picked up value of clearance from the records of appellant including their balance sheet. The balance sheet stand held to be a public document by various decisions of Tribunal and it stand concluded that reflection of entire fact in the balance sheet would amount to disclosure of factual position and would not involve any suppression of fact or misstatement with an intention to evade payment of duty. If that be so the element of mala fide is missing and would not call for imposition of any penalty. The penalty set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty under Section 11AC of Central Excise Act

Analysis:
The appellant was penalized &8377; 8,09,070 for failing to pay the revised duty rate on 'Paint Brush' following amendments in the duty rate notifications. The appellant continued to clear goods at nil rate of duty despite the rate being increased to 8% and then 10%. Upon investigation, the appellant acknowledged the duty liability and promptly paid the duty along with interest. The show cause notice for penalty was issued based on this non-compliance.

The appellant argued that since they had paid the duty before the show cause notice, the proceedings should have been closed under Section 11A of the Central Excise Act. Additionally, they claimed ignorance of the changes in duty rates, maintained proper records, and acted without any intention to evade duty. The appellant's advocate contended that the balance sheet, from which the revenue derived the value of clearance, is a public document and does not amount to suppression of facts or misstatement to evade duty.

The Tribunal agreed with the appellant's argument, noting that the balance sheet is a public document and its disclosure does not indicate any malafide intent to evade duty. As a result, the Tribunal set aside the penalty while confirming the duty demand and interest payment. The appeal was disposed of in favor of the appellant, emphasizing the absence of malafide intent as a crucial factor in penalty imposition under Section 11AC of the Central Excise Act.