2010 (2) TMI 1022 - AT - Central Excise

Appeal dismissed as no evidence of evasion or fraud found under Section 11AC

The appeal was filed by the Revenue against the respondents for dropping penalties under Section 11AC of the Act. The Revenue argued for penal action ... - Issues:Appeal against dropping penalties under Section 11AC of the Act.Analysis:The appeal was filed by the Revenue against the respondents for dropping penalties under Section 11AC of the Act. The Revenue contended that the respondents should be penalized as per the decision in the cases of Dharamendra Textile and Rajasthan Spinning and Weaving Mills, where the Apex Court held that when duty demand is confirmed, an equivalent amount of penalty under Section 11AC is mandatory. The Revenue argued that the respondents should face penal action, and the impugned order dropping the penalties should be set aside.Upon hearing the case, it was noted that both the lower authorities had dropped the penalty against the respondents based on the fact that the assessee had failed to include certain costs while determining the assessable value. The department could not establish any fraud, collusion, willful misstatement, or intent to evade duty payment. The Commissioner's appeal also highlighted that the case was about short payment of duty identified during an audit, and the audit manual clarified that penalties should be imposed under specific circumstances. However, as no evidence of evasion or fraudulent activities was found in this case, the penalties were dropped.The learned DR failed to challenge the findings of the lower authorities, and upon review, it was concluded that there were no grounds under Section 11AC to impose penalties on the respondent. Consequently, the appeals were dismissed, and the impugned orders dropping the penalties were upheld.