Tribunal cancels penalty under Central Excise Act, citing exemption notification interpretation principle.

The Tribunal set aside the penalty imposition under section 11AC of the Central Excise Act, relieving the Appellant from the penalty. The decision was based on the precedent that penalties should not be imposed when demands relate to the interpretation of exemption notifications. The Appellant's case fell under this principle, leading to the successful appeal outcome.

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Issues:
- Imposition of penalty under section 11AC of the Central Excise Act when duty and interest were paid before the issuance of Show Cause Notice.

Analysis:
The case involved an appeal before the Appellate Tribunal where the Appellant, engaged in manufacturing corrugated paper products, had not registered with the central excise department for clearances made from 2011-12 to 2014-15. The Anti Evasion Wing revealed the duty liability, leading to the issuance of a Show Cause Notice in 2015. The Appellant had paid a significant amount towards duty liability before the notice. The Adjudicating Authority confirmed the demand, appropriating the payments made against duty, interest, and a portion against the penalty under section 11AC of the Act. The First Appellate authority upheld the penalty, prompting the appeal before the Tribunal.

The pivotal issue was whether the penalty under section 11AC of the Act could be imposed on the Appellant when the duty and interest had been paid before the Show Cause Notice. The Tribunal referred to a previous decision involving a similar dispute and held that penalties should not be imposed when demands hinge on the interpretation of exemption notifications. In line with this precedent, the Tribunal found the Appellant's case fell under this principle, leading to the setting aside of the penalty imposed.

In conclusion, the Tribunal set aside the impugned orders regarding the penalty imposition and allowed the Appellant's appeal, thereby relieving them from the penalty under section 11AC of the Central Excise Act. The judgment was pronounced on 16.09.2022 by Hon'ble Mr. P.K.Choudhary, Member (Judicial) of the Appellate Tribunal CESTAT KOLKATA.

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