Section 11AC penalty upheld where suppression through debit notes triggered mandatory consequences despite absence of intent to evade duty.

Non-disclosure of cylinder and art work charges recovered through debit notes was treated as suppression, triggering penalty exposure under Section 11AC of the Central Excise Act, 1944. The Tribunal held that once the statutory conditions for penalty were attracted, the provision operated mandatorily, and a plea of bona fide lapse or absence of intention to evade duty was insufficient to avoid the statutory consequence. The penalty under Section 11AC was therefore upheld against the assessee.

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Issues: Whether penalty was imposable under Section 11AC of the Central Excise Act, 1944 despite the assessee's plea of absence of intention to evade duty.

Analysis: The demand and penalty arose from non-disclosure of cylinder and art work charges recovered through debit notes. The finding of suppression was accepted, and the Tribunal treated the penalty provision as mandatory once the statutory conditions were attracted. The plea of bona fide lapse or absence of mala fide intention was held insufficient to avoid the statutory consequence.

Conclusion: The penalty under Section 11AC was upheld against the assessee.

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