Section 11AC penalty requires culpable evasion; excess duty collected and deposited under Section 11D was insufficient.

Penalty under Section 11AC of the Central Excise Act, 1944 is not attracted where an assessee merely collects an excess amount as excise duty from customers on sale of pre-budget stock and deposits that excess under Section 11D, without any allegation or proof of fraud, wilful misstatement, suppression of facts, or intent to evade duty. Section 11AC applies only when the statutory conditions linked to culpable evasion are satisfied. In the absence of such conduct, deposit of the excess amount under Section 11D does not justify penalty under Section 11AC.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was leviable where the assessee had collected an excess amount as excise duty from customers on sale of pre-budget stock and deposited the excess with the Department under Section 11D of the Central Excise Act, 1944, without any allegation of fraud, wilful misstatement, suppression of facts, or intent to evade duty.

Analysis: The excess amount realised from customers was treated as duty collected in excess of the duty actually paid and was deposited in accordance with Section 11D of the Central Excise Act, 1944. The record did not disclose any non-levy, short levy, erroneous refund, fraud, wilful misstatement, suppression of facts, or other conduct intended to evade duty. Section 11AC is attracted only where the statutory preconditions relating to evasion through culpable conduct are satisfied. In the absence of such allegations or proof, mere payment of excess collected duty under Section 11D does not justify the imposition of penalty under Section 11AC.

Conclusion: Penalty under Section 11AC was not invokable and its imposition was unjustified.

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