The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad confirmed penalty under Section 11AC of Central Excise Act, 1944 as there was short payment of duty amounting to 21 lakhs.
The appellant’s, Meghmani Organics Ltd unit was initially an EOU unit which later on underwent debonding on 28.01.2008. During the course of audit, it was pointed out that there was a short payment of duty amounting to Rs.21,38,277 being central excise duty payable on stock of goods. The audit was undertaken in the month of September and October, 2008.
The appellant on being pointed out by the audit, deposited the amount of duty along with interest. A show cause notice was issued on 16.01.2009, the show cause notice was adjudicated wherein, demand of short payment of duty was confirmed and the same along with payment of interest has been appropriated. Apart from duty and interest, a demand of equal penalty under Section 11AC was imposed.
The appellant before the adjudicating authority as well as the Commissioner (Appeals) agitated only in respect of imposition of penalty under Section 11AC. Both the authorities have held that appellant are liable for penalty of equal amount under Section 11AC and therefore, the present appeal filed by the appellant.
Amal Dave, Counsel appearing on behalf of the appellant submits that the appellant on pointing out by the audit immediately paid the short payment of duty along with interest. There was no mala fide on the part of the appellant therefore, the penalty under Section 11AC was not imposable.
Vijay G. Iyengar,Superintendent (AR) appearing on behalf of the Revenue submitted that the appellant was aware that the short payment was supposed to be paid at the time of debonding of the unit but they suppressed this fact till the audit has pointed out therefore, the penalty under Section 11AC was rightly invoked and imposed by both the lower authorities.
A Coram consisting of Ramesh Nair, Judicial Member held that “The appellant was well aware that the duty due on the stock was required to be paid for debonding of the EOU. Though, the appellant have paid the duty on the stock as on 03.01.2008 but knowing that some goods were lying from 03.01.2008 to 28.01.2008 but have not paid the duty. Therefore, even though they paid on pointing out by the audit and despite the show cause notice covers period of one year, they clearly fall under four corners of Section 11AC accordingly, the penalty was rightly imposed under Section 11AC of the Central Excise Act, 1944 on the appellant.”
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