Bona fide explanation and no intent to evade duty meant excise penalty and interest were not leviable.

Where the assessee's explanation for non-payment of excise duty was bona fide, and the record did not show wilful suppression, fraud, collusion, or intent to evade duty, the mandatory consequences under the Central Excise provisions did not arise. The technical know-how charges were said to have been received for development of carburetors and passed on to the foreign collaborator, with no false explanation shown, and duty was paid after the preventive unit pointed out the mistake. On those facts, penalty under Section 11AC and interest under Section 11AB were held not leviable.

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Issues: Whether the assessee's conduct amounted to wilful suppression or intent to evade duty so as to justify levy of penalty and interest under the Central Excise law.

Analysis: The assessee explained that the technical know-how charges were received for development of carburetors and were passed on to the foreign technical collaborator, with no monetary gain to itself. The explanation was not shown to be false, and the record indicated that duty was paid after the mistake was pointed out by the preventive unit. The relevant version of Section 11AB applied only where non-payment or short payment occurred by reason of fraud, collusion, wilful mis-statement, suppression of facts, or contravention with intent to evade duty. On the facts found, the conduct was held to be bona fide and lacking in any intention to evade duty.

Conclusion: Penalty under Section 11AC and interest under Section 11AB were not leviable.

Ratio Decidendi: Where the assessee's explanation is bona fide and there is no wilful suppression or intent to evade duty, the mandatory consequences of penalty and interest under the excise provisions do not arise.

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