Suppression of facts under central excise law justified penalty, though the penalty amount was reduced on surrounding circumstances.

Suppression of material facts, including non-registration and clearance of motor vehicle bodies without duty payment, was treated as sufficient to satisfy the precondition for penalty under Section 11AC of the Central Excise Act. The assessee did not dispute the duty demand, and the facts recorded in the show cause notice were taken as establishing concealment from the Revenue. Penalty was therefore considered imposable, although the surrounding circumstances were treated as relevant for moderation of the penalty amount. The penalty was reduced to a lower quantum.

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Issues: Whether penalty under Section 11AC of the Central Excise Act was attracted on the facts found in the show cause notice and whether the penalty deserved reduction.

Analysis: The application for rectification proceeded on the basis that the assessee had not disclosed material facts to the Revenue, including non-registration and manufacture and clearance of motor vehicle bodies without payment of duty. The omission was treated as suppression of facts within the show cause notice, and the assessee did not dispute the duty demand. In those circumstances, the precondition for invoking penalty under Section 11AC was held to be satisfied. At the same time, the surrounding facts were considered relevant for moderation of the penalty quantum.

Conclusion: Penalty under Section 11AC was held to be imposable, but the quantum was reduced to Rs. 10,000.

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