Section 11AC penalty requires proof of suppression or culpable conduct; waiver remanded for fresh factual consideration.

Penalty under Section 11AC of the Central Excise Act applies only where non-payment of duty is linked to fraud, collusion, suppression of facts, or similar culpable conduct. The waiver granted by the Commissioner (Appeals) was found unsustainable because it relied on earlier decisions without examining whether the statutory ingredients for penalty were actually established on the facts. As the record showed that suppression had not been properly considered, the penalty issue could not be finally determined on the existing findings. The matter was remanded to the Commissioner (Appeals) for fresh consideration of the factual and legal basis for invoking Section 11AC.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was correctly waived, and whether the matter required reconsideration on the question of suppression of facts and other statutory ingredients for levy of penalty.

Analysis: Penalty under Section 11AC is attracted only where non-payment of duty is attributable to fraud, collusion, suppression of facts, or similar culpable conduct. The waiver ordered by the Commissioner (Appeals) rested only on earlier decisions, without examining whether the factual ingredients for invoking Section 11AC were present. Since the record indicated that the aspect of suppression had not been properly considered, the correctness of the penalty order could not be decided finally on the existing findings.

Conclusion: The question of penalty under Section 11AC was not finally affirmed or set aside on merits, and the matter was remanded to the Commissioner (Appeals) for fresh consideration in light of the relevant facts and the legal position.

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