TMI Blog2014 (1) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... tice was held to be a misconceived interpretation by the Tribunal, whereby the Tribunal overlooked the two explanations which qualified the main provision of Section 11A(2-B) and accordingly, set aside the order passed by the Tribunal. In the show cause notice dated 10.10.2001, except for stating that the respondent/assessee has contravened the provisions of the Rules, there is no specific allegation so as to hold the respondent/assessee guilty of having committed fraud, collusion or suppression of facts or made any willful misstatement with an intent to evade payment of duty. In terms of the provision of section 11AC of the Act, the authority is bound to record a prima facie finding that there was an intent to evade payment of duty by suppressing the materials facts or by making willful mis-statement or by committing fraud or collusion. Thus, in the absence of any such specific allegation in the show cause notice, the authorities cannot mechanically impose penalty under Section 11AC of the Act. After the assessee submitted their explanation, the Adjudicating Authority while passing the order dated 24.09.2002, only observed that there is possible manipulation of scrap accounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the department and the demand was made under the proviso to Section 11A(1) on reason of suppression of facts or wilful misstatement of contravention of the provisions of Central Excise Act and Rules made there under with intent to evade payment of duty? 2. The respondent/assessee is engaged in the manufacture of plastic articles availing Modvat/Cenvat credit facilities. On a verification done at their factory, shortage of XLPE scrap was found. This resulted in issuance of show cause notice dated 10.10.2001, demanding Modvat credit of Rs.5,52,045/- under Rule 57I of the Central Excise Rules, 1944, (Rules) and a proposal to confirm and adjust the amount paid already and to charge interest under Section 11AB of the Central Excise Act, 1944 (Act) and impose penalty under Rule 173Q of the Rules and penalty under Section 11AC of the Act. The assessee submitted their reply and the Adjudicating Authority confirmed the demand of credit taken to the tune of Rs.2,51,177/- along with interest and imposed penalty of equal amount on the ground that the scrap account was manipulated and there has been removal of scrap without payment of duty. The appeal filed by the first respondent/asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, would stand attracted. Section 11AC deals with 'Penalty for short-levy or non-levy of duty in certain cases' and the said provision reads as follows:- 11AC:- 'Penalty for short-levy or non-levy of duty in certain cases:- Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11-A, shall also be liable to pay a penalty equal to the duty so determined; Provided that where such duty as determined under sub-section (2) of Section 11-A, and the interest payable thereon under section 11-AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this Section be twenty-five per cent, of the duty so determined: Provided further that the benefit of reduced penalty under the first proviso shall be availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment or short payment of duty regardless of the conditions expressly mentioned in Section 11AC for its application. It was further pointed out that the decision in the case of Dharmendra Textile Processors(supra) must be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the Section, once the Section is applicable in a case, the authority concerned would have no discretion in quantifying the amount and penalty must be imposed equal to duty determined under sub-section (2) of Section 11A of the Act. Thus, the issue would be as to whether Section 11AC would stand attracted to the facts of the present case. 10. We have perused the show cause notice, the order in original, the order passed by the Appellate Authority and the impugned order passed by the Tribunal. In the show cause notice dated 10.10.2001, except for stating that the respondent/assessee has contravened the provisions of the Rules, there is no specific allegation so as to hold the respondent/assessee guilty of having committed fraud, collusion or suppression of facts or made any willful misstatement with an intent to evade p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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