Imposition of penalty both under section 11A and 11AC.

[VINOD KUMAR]

Whether both the penalty under section 11A(5) and 11AC can be imposed on a manufacture on account of fraudulent availment of cenvat credit during the year 2011-12.

[Rajagopalan Ranganathan]

Sir,

Section 11 A (5) of Central Excise Act 1944 states that-

(5) Where, during the course of any audit, investigation or verification, it is found that any dutyhas not been levied or paid or has been short-levied or short-paid or erroneously refunded for the reason mentioned in clause (a) or clause (b) or clause (c) or clause (d) or clause (e) of sub-section (4) but the details relating to the transactions are available in the specified record, then in such cases, the Central Excise Officer shall within a period of five years from the relevant date, serve a notice on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice along with interest under section 11 AA and penalty equivalent to fifty per cent of such duty.

Under Section 11 AC the amount of penalty is 100% of of duty evaded due to reason of fraud; or collusion; or any wilfulmis-statement; or suppression of facts; or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice.

In my opinion for the same offence two penalties cannot be imposed under two different section. Penalty under Section 11 (5) can be imposed only when grounds specified under that section is satisfied, Section 11 (5) relates to short levy or non-levy, short payment or non-payment of duty is detected by Audit during investigation or verification and the particulars are available on the records maintained by the assessee.

[Mahir S]

You may refer section 11A(5) read with section 11 AC (b).

[YAGAY andSUN]

Dear Vinod,

"Nemo debet bis vexari", this means that no man shall be put twice in peril for the same offence. Constitution of India is supreme law in India. Article 20(2) enumerates that no person shall be prosecuted and punished for the same offence more than once. This is called Doctrine of Double Jeopardy. The objective of this article is to avoid harassment, which must be caused for successive criminal proceedings, where the person has committed only on e crime.

There are two aspects of Doctrine of Jeopardy viz.

1. Autrefois convict :- means that the person has been previously convicted in respect of the same offence.
2. Autrefois acquit: - means that the person has been acquitted on a same charge on which he is being prosecuted.

This is for your kind information.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

AI Summary

Double jeopardy: the same excise act should not trigger both audit-based and fraud-based penalties concurrently. Whether both penalties may be imposed turns on distinct statutory triggers: the audit-discovered short-levy penalty under Section 11A(5), applicable when particulars exist in the assessee's records, and the fraud-based penalty under Section 11AC, applicable when duty is evaded by fraud, collusion, wilful misstatement, suppression of facts or intentional contravention. The same factual act should not attract both penalties for the identical offence; constitutional protection against double jeopardy operates as a limiting principle.