2005 (11) TMI 339

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....rate of duty on 11843 quintals of free sale sugar supplied to the Government of India, on loan basis as levy sugar. The allocated quantity was taken on loan basis from the free sale portion of sugar factory as per DTE of sugar, letter dt. 28-10-98. Subsequently the Government of India paid differential price to the appellants without adjusting the same in the next season. The appellants have contented that they have paid the differential duty of Rs. 3,90,819/- in the month of February, 1999, before issue of the SCN by the department. The appellants have delivered the loan quantity of 11843 quintals as levy sugar as per the order of Directorate of Sugar, Ministry of Food, New Delhi, charging excise duty as applicable to levy sugar and delive....

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....port of their contention is well founded. Collector v. Chemphar Drugs and Liniments, 1989 (40) E.L.T. 276 Lubri-chem Industries Ltd. v. Collector, 1994 (73) E.L.T. 257 (S.C.) 8. In both the cases cited above, the Hon'ble Supreme Court has held that in order to make demand for excise duty sustainable beyond a period of 6 months under Section 11A of CE Act, it has to be established that excise duty has been short-paid or short-levied by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provisions of the Act or Rules, with intent to evade payment of duty. Something more positive than mere inaction or failure on part of the assessee or conscious or deliberate withholding of inform....

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....t to evade payment of duty. From the foregoing facts, I find that these averments in the show cause attributing mala fide intention to the assessee are factually incorrect. The fact regarding clearance of levy sugar on loan basis out of free sale quota, as per release order of Director of Sugar, New Delhi was never suppressed by the appellants, Nor there was any deliberate attempt to evade payment of duty. The duty was paid as soon as the differential price was paid to the appellants by the Government. The learned adjudicating authority had not given any findings on these aspects justifying imposition of penalties including mandatory penalty and charging of interest. As there was no fraud, collusion or any wilful mis-statement or suppressio....