2015 (8) TMI 896

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....y discretion with the authorities to waive off penalty under Rule 57U(6) of the Central Excise Rule, 1944 read with Section 11AC of the Central Excise Act, 1944? (2) Whether penalty can be set aside merely because the evaded excise duty is paid before issuance of the Show Cause Notice by the Department? 3. Briefly the facts leading to the present appeal are that on 18/02/1999 the Officers of Central Excise Department intercepted a tempo van bearing registration no.GJ/5U/675. On examination, it was found that the said van was loaded with 20 drums of chemicals under the brand name of DEHPA (spent) (hereinafter referred to as 'goods') which had been loaded from the factory of the respondent. However, the goods were not accompanie....

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....the 4000 kgs of the goods much before the issue of the show cause notice. Besides, they were under a bonafide belief that the said goods had become unserviceable being in nature of waste/sludge therefore, not dutiable. Thus non-payment of duty was on the basis of bonafide understanding that the said goods were waste. In these circumstances, the respondent-Assessee prayed that no penalty be imposed upon them. 6. The Commissioner of Central Excise by an order dated 13/02/2006 confirmed the show cause notice. However, the demand was reduced from Rs. 2.44 lakhs to Rs. 52,000/- and, consequently, an equivalent penalty of Rs. 52,000/- was also imposed upon the respondent under Rule 57U read with 173Q of the Rules read with Section 11AC of the ....

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....n left with the authorities under the Act to waive penalty once Section 11AC of the Act has been invoked. She further submits that merely because the duty along with interest has been paid before the issue of show cause notice penalty does not stand automatically waived. In support of the above she relied upon the decision of the Supreme Court in Rajasthan Spinning & Weaving Mills (supra) wherein it has been observed that where duty has been paid before issue of show cause notice, but the original non-payment was with an intent to evade duty, then the mere payment of duty prior to issue of show cause notice would not absolve the Assessee from being liable for penalty. 9. As against the above, Mr. Srivatava, learned Counsel for the respon....