2014 (5) TMI 527

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....ance of show cause notice and as such, they are not liable to pay penalty under Section 11AC of the Central Excise Act. Brief Facts : 2. M/s. Motherson Sumi Systems Ltd., [hereinafter referred to as 'the assessee'], are engaged in the manufacture and clearance of excisable goods viz., wiring harness falling under Chapter Heading 8544.90 of Central Excise Tariff Act, 1985. The premises of the assessee was inspected by the Preventive Group, Chingleput Division on 19th August, 2000 and on verification of the records it was found that the assessee had adopted incorrect assessable value in the clearance of Wiring Harness for the period from 1st June, 2000 to 15th August, 2000 under stock transfer to their sister unit at Pune where it ....

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....ibunal was in error in holding that the penalty imposed under Section 11AC of the Central Excise Act, 1944 and the interest charged under Section 11AB of the Central Excise Act, 1944 are not sustainable if the duty is paid before issuance of show cause notice irrespective of the fact that evasion of duty was detected by the Department and the demand was made under the proviso to Section 11A(1) of the Central Excise Act, 1944 on reason of suppression of facts or wilful misstatement or contravention of the provisions of Central Excise Act and Rules made thereunder with intention to evade payment of duty ?" Rival Submissions : 7. She learned Standing Counsel for the Revenue challenged the order passed toy the Commissioner (Appeals) ....

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....n of the price list, found that the list price was higher than the declared price. The adoption of lower price by the assessee for the clearances effected on stock : transfer to their sister concern at Pune was not in order, inasmuch as the list price was already available which obviates adoption of cost, construction method as per valuation rules inasmuch as clearances are effected to a related person. The Original Authority further observed that the goods were neither captively consumed nor consumed on their behalf in the production or manufacture of other articles and as such, a clear case of duty evasion was made out. It is also true that immediately, the assessee paid the differential duty. 10. The core issue is whether the ass....

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....would not alter the situation and they would be liable for penalty in case the conditions for imposing such penalty spelt out in Section 11AC of the Act is attracted. 14. The Supreme Court in Rajasthan Spinning and Weaving Mills very categorically observed that penalty under Section 11AC as the very word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. The Supreme Court by interpreting the earlier judgment in Union of India v. Dhaamendra Textile Processors [2008 (231) E.L.T. 3], observed that though the application of Section 11AC would depend upon existence or otherwise of the conditions expressly stated in the Section, on....

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....ch duty as determined under sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this Section be twenty-five percent of the duty so determined." 18. A reading of the provision of Section 11AC indicates that where such duty as determined under sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under the Section ....