Section 11AC penalty requires fraud or suppression; belated credit reversal without intent to evade was not penalised.

Penalty under Section 11AC of the Central Excise Act was held inapplicable where the assessee reversed the credit belatedly, paid the CVD component later with interest, and the record showed no fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty. The High Court noted that the goods were cleared to a sister unit and that the essential ingredients for penal liability were absent, so interference with the Tribunal's view was not warranted. The departmental appeal therefore failed and the assessee succeeded.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was exigible when the assessee reversed the credit belatedly without fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty.

Analysis: The goods were cleared to a sister unit and the credit taken for other duties was reversed, while the CVD component was paid subsequently with interest. The record did not disclose any fraudulent conduct, collusion, wilful misstatement, or suppression of facts with intent to evade duty. In the absence of the ingredients attracting penal liability under Section 11AC, interference with the Tribunal's view was unwarranted.

Conclusion: Penalty under Section 11AC was not leviable; the assessee succeeded and the departmental appeal failed.

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