Section 11AC penalty requires intent to evade duty; bona fide mistake and rectification cannot sustain the levy.

Penalty under Section 11AC of the Central Excise Act, 1944 is attracted only when there is deliberate deception or an intention to evade duty. On the finding that the assessee had committed only a bona fide mistake, later rectified, and that there was no intent to evade tax, the penalty could not be sustained. The Tribunal's finding, affirmed by the High Court, therefore stood, and no interference was warranted.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was leviable when the finding was that the assessee had committed only a bona fide mistake which was later rectified and there was no intention to evade duty.

Analysis: Penalty under Section 11AC is attracted only where there is deliberate deception or intent to evade duty. The finding recorded by the Tribunal, and affirmed by the High Court, was that the matter involved a bona fide mistake and that there was no intention to evade tax. In light of that finding and the governing principle on Section 11AC, no interference was warranted.

Conclusion: The penalty was not sustainable and the appeals failed.

Ratio Decidendi: Penalty under Section 11AC of the Central Excise Act, 1944 is not attracted in the absence of deliberate deception or intent to evade duty.

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