2006 (7) TMI 23

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....equiring the assessee to show cause why additional duty and penalty be not imposed. 2. After considering the view point of the assessee, the adjudicating authority held that the party had clandestine removed finished goods without issue of invoice and without payment of duty. Interest and penalty was levied thereon willfully and intentionally evading payment of duty. The said duty was however, deposited without any protest on 23-5-2001 prior to the show cause notice dated 19-6-2001. The adjudicating authority concluded as under:- "I come to the unmistakable conclusion that the differential quantity has been surreptitiously removed without following the prescribed Central Excise procedure and without payment of duty. In view of this I ....

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.... levied or for having not paid by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act. Learned counsel for the assessee quoted judgment of the Tribunal and decisions relied upon therein. 5. We have considered rival contentions and perused the records and statutory provisions. 6. Provision of Section 11AC of the Act providing for penalty reads as under:- "11AC. Penalty for short-levy or non-levy of duty in certain cases. - Where any duty of excise has not been levied or paid or has been short levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the pr....

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....nt of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect." 7. A perusal of the above provision shows that the said provision incorporates liability to pay penalty in the situations mentioned therein. Once a case is covered by the situation mentioned in the Section, mere deposit prior to issuance of show cause notice under Section 11A of the Act will not necessarily negate the situation mentioned in the said Section. 8. Learned counsel for the assessee referred to sub-section 2B of Section 11A of the Act, wherein the statute itself has provided a situation, that on deposit being made, the assessee will not be served notice under ....