Mandatory excise penalty not sustained where duty and interest were paid, with no suppression or intent to evade.

Penalty under Section 11AC of the Central Excise Act was held unsustainable where the duty demand arose from interpretational issues, the assessee paid the duty and interest before adjudication, and the record showed no suppression of facts, misstatement, fraud, or intent to evade. Regular filing of returns and computation of demand from worksheets and data supplied by the assessee supported the absence of the statutory conditions for mandatory penalty. On those facts, the penalty was set aside in favour of the assessee.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable when the duty liability and interest had been paid immediately after being pointed out and there was no suppression, misstatement, fraud, or intention to evade duty.

Analysis: The duty demands arose from interpretational issues and had been discharged by the assessee before adjudication, along with interest. The record did not show suppression of facts, misstatement, fraud, or any intent to evade payment. The returns were filed regularly and the demands were worked out on the basis of worksheets and data furnished by the assessee. In such circumstances, the conditions for invoking mandatory penalty were not satisfied, and the penalty could not be sustained.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 was not leviable and was set aside in favour of the assessee.

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