Section 11AC penalty fails absent suppression or intent to evade in invoice-based clearances

Penalty under Section 11AC of the Central Excise Act was not sustainable where the goods were cleared under invoices, facts were not suppressed, and the record showed no deliberate attempt to evade duty. The assessee had described the goods as parts of air-conditioners and claimed exemption under Notification No. 22/2000-CE, but that beneficial interpretation alone did not establish clandestine removal or intent to evade. On these facts, the penalty was deleted and the Revenue's challenge failed.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable on the facts, and whether the assessee's clearance of goods as parts of air-conditioners amounted to clandestine removal with intent to evade duty.

Analysis: The goods were cleared under invoices and there was no suppression of facts. The assessee had described the goods as parts of air-conditioners and claimed exemption under Notification No. 22/2000-CE dated 6-3-2000. The interpretation adopted by the assessee was beneficial to it, but the record did not disclose any deliberate attempt to evade duty or any conduct equating the case with clandestine removal. In such circumstances, the penalty could not be sustained.

Conclusion: The issue was decided against the Revenue and in favour of the assessee; the deletion of penalty under Section 11AC was upheld.

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