Appeal allowed due to technical allegations, no duty demanded, and lack of mala fide intention

The appeal was filed against the imposition of a penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) noted that no duty was demanded, and there was no evidence of mala fide intention. The allegations in the show cause notice were considered technical, and the penalty imposed on the appellant was reduced. As there was no requirement for penalty imposition based on the findings, the impugned order imposing the penalty was set aside, and the appeal was allowed.

---

---

Issues:
- Appeal against imposition of penalty under Rule 25 read with Section 11AC of Central Excise Act, 1944.

Analysis:

The appellant appealed against an order imposing a penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944. The case revolved around the appellant clearing goods by paying duty on inputs during 2011-12 to 2012-13, with supplementary duty also paid later. An audit revealed that the appellant was liable to pay interest for the period between actual clearance of goods and raising supplementary invoices. Subsequently, a show cause notice was issued to the appellant for interest appropriation and penalty imposition under Rule 25 read with Section 11AC. Both lower authorities upheld the interest appropriation and penalty imposition.

Upon hearing the parties and considering the submissions, it was noted that under Rule 25 of the Central Excise Rules, 2002, and Section 11AC, a penalty is applicable in cases involving fraud, collusion, wilful misstatement, or suppression of facts with the intent to evade duty payment. The Commissioner (Appeals) in the impugned order observed that no duty was demanded, and there was no evidence of mala fide intention. The allegations in the show cause notice were deemed technical in nature. The Commissioner (Appeals) reduced the penalty imposed on the appellant, noting that there was no challenge to the finding that there was no mala fide intention. Consequently, as there was no requirement for penalty imposition, the impugned order imposing the penalty was set aside, and the appeal was allowed.

---