Tribunal revokes penalty for duty non-payment on 'Paint Brush' under Central Excise Act

The Tribunal set aside the penalty imposed on the appellant under Section 11AC of the Central Excise Act for failing to pay the revised duty rate on 'Paint Brush'. The appellant acknowledged the duty liability, paid the duty with interest, and argued ignorance of the duty rate changes. The Tribunal agreed that the appellant's actions did not show any intention to evade duty, emphasizing the absence of malafide intent. Consequently, the penalty was revoked while confirming the duty demand and interest payment in favor of the appellant.

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Issues: Penalty under Section 11AC of Central Excise Act

Analysis:
The appellant was penalized &8377; 8,09,070 for failing to pay the revised duty rate on 'Paint Brush' following amendments in the duty rate notifications. The appellant continued to clear goods at nil rate of duty despite the rate being increased to 8% and then 10%. Upon investigation, the appellant acknowledged the duty liability and promptly paid the duty along with interest. The show cause notice for penalty was issued based on this non-compliance.

The appellant argued that since they had paid the duty before the show cause notice, the proceedings should have been closed under Section 11A of the Central Excise Act. Additionally, they claimed ignorance of the changes in duty rates, maintained proper records, and acted without any intention to evade duty. The appellant's advocate contended that the balance sheet, from which the revenue derived the value of clearance, is a public document and does not amount to suppression of facts or misstatement to evade duty.

The Tribunal agreed with the appellant's argument, noting that the balance sheet is a public document and its disclosure does not indicate any malafide intent to evade duty. As a result, the Tribunal set aside the penalty while confirming the duty demand and interest payment. The appeal was disposed of in favor of the appellant, emphasizing the absence of malafide intent as a crucial factor in penalty imposition under Section 11AC of the Central Excise Act.

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