2014 (5) TMI 792

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..... d in the manufacture of detergents falling under Chapter 34. The officers of the Preventive Unit visited the factory premises of the assessee on 29 August 1997. Verification of the records relating to credit revealed that the assessee had incorrectly availed credit of duty. It was also found that the assessee had incorrectly taken credit of duty on ten different items of capital goods which were either not installed at all in the factory or not included in the statement of capitals. Immediately, on pointing out this defect, the assessee expended the credit of duty involved on inputs and capital goods. This was followed by a show cause notice calling upon the assessee to submit their explanation as to why penalty and interest should not be l .....

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..... itted an error of law in holding that the respondent is not liable to pay the penalty under Section 11AC of the Central Excise Act and Rule 173Q of Central Excise Rules since the respondent has paid the duty prior to issuance of the show cause notice dated 21-10-1997?" 6. We have heard the learned counsel for the parties. Analysis and Conclusion : 7. There is no dispute that the assessee paid the duty immediately after the inspection conducted by the officials of the Department of Central Excise. Even though difference amount was paid immediately, the Original Authority opined that the assessee cannot escape from the liability of payment of penalty. Accordingly, the assessee was directed to pay penalty. The said order was partl .....

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..... cause notice would not alter the situation and they would be liable for penalty in case the conditions for imposing such penalty spelt out in Section 11AC of the Act is attracted. 12. The Supreme Court in Rajasthan Spinning and Weaving Mills very categorically observed that penalty under Section 11AC as the very word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. The Supreme Court by interpreting the earlier judgment in Union of India v. Dharamendra Textile Processors [2008 (231) E.L.T. 3], observed that though the application of Section 11AC would depend upon existence or otherwise of the conditions expressly stated in the .....

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