2007 (2) TMI 522

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....reproduced herein below :- "I have gone through the case records and the submissions made by the respondents. The issue involved in the present appeal is whether imposition of penalty under Section 11AC of the Act is warranted or not in view of facts of this case. I find that the appellants have cleared sugar to dealers/buyers without payment of duty in the month of October, 2001, without accounting for the quantity in the books of accounts and they had also not furnished the monthly E.R.I. Return for October, 2001. The respondents have stated that due to floods and cyclone on 16/17-10-2001, the records of the unit were washed away; that the factory was submerged in the water. Therefore they concentrated on retrieval of the goods and could....

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....with intent to evade payment of duty is not proved against the respondents. The order passed by him is tenable. Penalty has to be imposed when there is mala fide intention on the part of an assessee/manufacturer. The Hon'ble Madras High Court in the case of CCE, Tiruchirapalli v. CEGAT, Chennai reported in 2001 (133) E.L.T. 536, while rejecting the reference application filed by the Department, has held that despite prescription of penalty in the statutory provision, the element of discretion still lies with the proper officer. The Hon'ble Supreme Court of India in the case of Hindustan Steel Ltd. v. State of Orissa reported in 1978 (2) E.L.T. 1059 observed - "An order imposing penalty for failure to carryout a statutory obligation is the ....