Mandatory findings for excise penalty under Section 11AC(1)(a) are required before penalty can be sustained.

Penalty under Section 11AC(1)(a) of the Central Excise Act cannot be imposed automatically on every case of non-payment or short-payment of duty; it is attracted only where the statutory ingredients of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty are recorded. Because the authority failed to make such a finding and treated penalty as a consequence of duty default alone, the penalty order could not be sustained and was liable to be set aside.

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Issues: Whether penalty under Section 11AC(1)(a) of the Central Excise Act, 1944 could be imposed without a finding that the non-payment or short-payment of duty was due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Act or Rules with intent to evade duty.

Analysis: Section 11AC(1)(a) permits penalty only when the statutory preconditions are satisfied, namely, that duty was not levied, short-levied, not paid, short-paid, or erroneously refunded by reason of fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Act or Rules with intent to evade payment of duty. The provision does not create an automatic liability for penalty on every duty default. A finding on the existence of the stated ingredients is therefore a necessary prerequisite before penalty can be imposed. The authority below treated penalty as a consequence automatically flowing from non-payment of duty and did not record the required finding.

Conclusion: Penalty could not be sustained without a recorded finding on the statutory ingredients in Section 11AC(1)(a), and the penalty order was liable to be set aside.

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