Tribunal Upholds Duty Evasion Penalty & Interest Ruling

The Tribunal found that respondents had a mala fide intention to evade Central Excise duty by supplying products to Government Institutions/Hospitals at a lower duty value. Despite paying the duty before the show-cause notice, the respondents were held liable for interest under Section 11AB and a penalty equal to the duty amount. The penalty under Section 11AC was limited to 25% if paid within 30 days, otherwise 100% penalty applied. The judgment emphasized the mandatory nature of penalty under Section 11AC and upheld the imposition of interest under Section 11AB, overturning the lower appellate authority's decision.

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Issues:
- Dropping demand of interest under Section 11AB and penalty under Section 11AC
- Supplying products to Government Institutions/Hospitals at lower duty value
- Payment of duty before issuance of show-cause notice
- Applicability of penalty under Section 11AC and interest under Section 11AB

Analysis:
- The appeal was filed by the Revenue against the dropping of the demand of interest under Section 11AB and penalty under Section 11AC. The case involved the respondents supplying products to Government Institutions/Hospitals through distributors at a lower duty value than the appropriate assessable value, leading to a mala fide intention to evade Central Excise duty.
- The respondents had paid the duty demand before the issuance of the show-cause notice. The lower appellate authority ruled that penalty under Section 11AC was not leviable in this scenario. The Revenue contended that penalty under Section 11AC is mandatory even if duty is paid before the notice, citing relevant case law.
- The Tribunal found that the respondents' actions showed a mala fide intention to evade duty by issuing invoices at a lower rate to distributors. Consequently, the respondents were held liable to pay interest under Section 11AB and a penalty equal to the duty amount. The penalty under Section 11AC was restricted to 25% of the duty if paid within 30 days; otherwise, 100% penalty was applicable.
- The judgment emphasized that the respondents' mala fide intention warranted the imposition of penalty under Section 11AC and that interest under Section 11AB was payable regardless of the circumstances. The impugned order was set aside, and the appeal was allowed, holding the respondents accountable for both interest and penalty.

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