2010 (8) TMI 732 - HC - Central Excise

Court upholds revenue challenge on benefit grant, penalties; emphasizes fair opportunity for assessee.

The court allowed the revenue's challenge to the Tribunal's order regarding the benefit granted by the Commissioner of Appeals and penalty imposition. It ... Penalty - assessee did not pay the duty as and when it became due, before the issue of show cause notice he paid the duty to avoid payment of penalty if any, as the law stood then, claimed the benefit in terms of the Board’s circular as at any rate, Board is estopped from contending to the contrary, denied the liability to pay interest - whether the conditions prescribed in Section 11AC of the Act exist or not – Held that:- assessee is to be given an opportunity to offer explanation and to contend that none of the conditions prescribed in the Section exist in this case. Issues:1. Challenge to Tribunal's order by revenue regarding benefit granted by Commissioner of Appeals and penalty imposition.2. Dispute over three items: benefit as per Board's circular, penalty payment, and interest payment.Analysis:Issue 1: The revenue appealed the Tribunal's decision regarding the benefit granted by the Commissioner of Appeals and the penalty imposition. The Tribunal held that the benefit granted in accordance with the Board's circular was valid. It was noted that duty had been paid before the show cause notice was issued, leading to the belief that no penalty could be imposed under the Act at that time.Issue 2: The dispute between the parties revolved around three main items: the benefit entitled to the assessee as per the Board's circular, the penalty payment, and the interest payment. The assessee had not paid the duty when it was due initially but paid it before the show cause notice to avoid potential penalties. The assessee claimed the benefit based on the Board's circular and denied liability for interest payment. The court emphasized that the imposition of penalty is not automatic and that the assessee should be given an opportunity to offer an explanation before any penalty is imposed.The court highlighted that the conditions prescribed in Section 11AC of the Act must be fulfilled before imposing a penalty. With the change in law due to the Apex Court's pronouncement, the automatic imposition of penalties was no longer valid. Therefore, the court decided to set aside the previous orders and remand the matter back to the Assessing Authority for a fresh consideration of all three issues, ensuring the assessee has a full opportunity to present their case. The appeal was allowed, and the matter was remanded for fresh consideration by the authorities.