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of <h1>Tribunal Upholds Penalty for Duty Short Payment Post Debonding</h1> <h3>Meghmani Organics Ltd Versus C.C.E. & S.T. -Surat-II</h3> Meghmani Organics Ltd Versus C.C.E. & S.T. -Surat-II - TMI Issues:Imposition of penalty under Section 11AC for short payment of duty post debonding from EOU unit.Analysis:The appellant's unit, initially an EOU, underwent debonding in 2008, leading to a short payment of central excise duty on stock of goods. The appellant paid the duty and interest upon audit pointing out the discrepancy. A show cause notice was issued, confirming the duty payment and interest but imposing a penalty under Section 11AC. The appellant contested the penalty imposition, arguing lack of mala fide intent and timely demand within one year. The revenue contended that the appellant knowingly avoided paying duty on subsequent goods post-debonding, leading to penalty invocation. The adjudicating authority upheld the penalty under Section 11AC, emphasizing the appellant's suppression of facts and intent to evade duty payment.The key question was whether the penalty under Section 11AC was justified. The adjudicating authority provided detailed reasoning for the penalty imposition, highlighting the appellant's conscious avoidance of paying duty on goods post-debonding despite being aware of the obligation. The appellant's payment upon audit discovery indicated intentional suppression of facts. The interpretation of Section 11AC revealed that penalty applies if duty evasion occurs due to fraud, collusion, willful misstatement, or suppression of facts. In this case, the appellant's deliberate non-payment post-debonding fell within these criteria, justifying the penalty under Section 11AC.The judgments cited by the appellant were deemed inapplicable as they differed from the present case's facts. The tribunal upheld the penalty under Section 11AC, dismissing the appeal. The decision emphasized the appellant's intentional avoidance of duty payment post-debonding, aligning with the criteria for penalty imposition under Section 11AC. Ultimately, the tribunal found no error in the impugned order's penalty confirmation, leading to the dismissal of the appeal.
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