Penalty for duty short-payment requires suppression or intent to evade; bona fide reliance on supplier data defeats penalty.

Penalty under the Central Excise Act was held inapplicable where undervaluation arose from reliance on the supplier's declared price and the assessee had no suppression of facts or intent to evade duty. The record showed that the supplier's description did not clearly disclose the omission in the component value, and the assessee acted on that declaration in bona fide reliance. In the absence of deliberate misstatement, fraudulent conduct, or mala fide intent, the statutory ingredients for penalty and the extended consequences of demand were not met, so the penalty order was set aside and the deposited amount was directed to be returned.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and the corresponding rules was leviable on the appellant when the undervaluation arose from reliance on the supplier's declared price and there was no suppression of facts or intent to evade duty.

Analysis: The value adopted for the component in question was taken from the supplier's declared particulars. The record showed that the supplier's description did not clearly disclose the omission of the bulb's value in the price of the lamp, and the appellant acted on that declaration. On those facts, the omission was held to be bona fide and not the result of any deliberate suppression, misstatement, or fraudulent intent to evade duty. In the absence of mala fide conduct, the ingredients for invocation of the penal provisions and the extended consequences of the demand were not satisfied.

Conclusion: Penalty was not leviable and the appellant succeeded.

Final Conclusion: The order imposing penalty was set aside and the appeal was allowed, with return of the deposited amount directed.

Ratio Decidendi: Penal consequences for duty short-payment require suppression of facts or intent to evade duty, and mere reliance on supplier-declared values without mala fide conduct does not attract such penalty.

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