2011 (6) TMI 439

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....ssenger vehicles classifiable under chapters sub-heading No. 8702.90 of the Schedule to the Central Excise Tariff Act, 1985 and they were availing cenvat credit on the inputs. Pursuant to the visit by the Preventive staff of the Excise department on 20.03.2004, it was revealed on scrutiny of records that during the financial year 2003-04 bus bodies valued at Rs. 5212105/- were dispatched by the appellants to various purchasers by clearing the same at nil rate of duty claiming the benefit of Notification No. 6/2002-CE dated 01.03.2002. Simultaneously, they were also manufacturing dutiable goods which were dispatched on payment of appropriate duty. However, the inputs used in manufacture of exempted as well as dutiable final product were neit....

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....he Hon'ble Rajasthan High Court in the case of Union of India vs. T.P.L. Industries Ltd. reported in 2007 (214) ELT 506. The Hon'ble Rajasthan High Court held that the penalty under Section 11AC is not sustainable in case duty has been paid prior to issuance of show cause notice. 4. The appellant also relied upon the decision of Hon'ble Punjab & Haryana High Court in the case of CCE Vs. Sigma Steel Tubes reported in 2007 (82) RLT 361 where the same view has been taken. In view of the above decisions, as the duty has been paid prior to issuance of show cause notice, therefore, imposition of penalty is not sustainable hence set aside. The appeal is allowed as indicated above". 5. The department being aggrieved by the said order approached t....

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.... for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19.?From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is pu....