Penalty under excise law needs specific allegations of suppression or fraud; mere reference to the penal section is insufficient.

Penalty under Section 11AC of the Central Excise Act, 1944 and Rule 15(2) of the Cenvat Credit Rules, 2004 was found unsustainable where the show cause notice did not specifically allege suppression, fraud, collusion or misdeclaration. The relevant removal of goods and debit of Cenvat credit were already reflected in statutory records and the ER-1 return, so mere citation of the penal provision was insufficient to justify the equal penalty. The demand and interest were maintained, but the penalty was set aside, granting partial relief to the assessee.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and Rule 15(2) of the Cenvat Credit Rules, 2004 was sustainable when the show cause notice did not specifically allege suppression, mis-declaration, fraud or collusion and the relevant facts were disclosed in the statutory records.

Analysis: The liability to penalty depended on the presence of the specific ingredients required for invocation of the penal provision. The removal of goods and the debit of Cenvat credit were reflected in the statutory records and in the ER-1 return, and the notice did not contain a specific allegation of suppression of facts regarding the removal on payment through Cenvat credit. In such circumstances, mere reference to the penal section was held insufficient to sustain the equal penalty.

Conclusion: The penalty under Section 11AC of the Central Excise Act, 1944 and Rule 15(2) of the Cenvat Credit Rules, 2004 was not imposable and was set aside in favour of the assessee.

Final Conclusion: The demand and interest were maintained, but the equal penalty was annulled, resulting in partial relief to the assessee.

Ratio Decidendi: A penalty provision of this kind cannot be invoked unless the show cause notice specifically alleges the requisite statutory ingredients and the necessary facts are not already fully disclosed in the statutory records.

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