Penalties under Central Excise law barred where clearances relied on exemption certificate and no fraud or suppression was shown.

Penalty under Section 11AC of the Central Excise Act, 1944 and Rule 26 of the Central Excise Rules, 2001 was not leviable where goods were cleared to a project authority on the basis of an exemption certificate under Notification No. 108/95 and the clearances were regularly disclosed in returns. The record did not show fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty, so the manufacturer's reliance on the certificate was treated as bona fide and the penal provisions could not be invoked.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and penalty on the representatives under Rule 26 of the Central Excise Rules, 2001 were leviable when clearances were made on the strength of a certificate issued by the project authority and the relevant facts were within the department's knowledge.

Analysis: The goods were cleared to the project authority on the basis of a certificate stating eligibility for exemption under Notification No. 108/95, and the clearances were reflected in returns filed regularly. The record did not establish any fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty. On these facts, the manufacturer's reliance on the certificate was treated as bona fide, and the absence of the necessary ingredients for penalty meant that the penal provisions could not be invoked.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 and penalty under Rule 26 of the Central Excise Rules, 2001 were not leviable.

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