By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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When it is proven that the respondents clandestinely cleared excisable goods, the assessee cannot escape penalty u/s. 11AC by paying the duty along with interest prior to the issuance of show cause notice.
Facts:
The question of law before the High Court was whether the Tribunal was right in setting aside the mandatory equal amount of penalty imposed by the lower appellate forum u/s. 11AC on a proven ground that the respondents had clandestinely cleared excisable goods. The Tribunal disposed of the appeal filed by the assessee at the admission stage itself on the ground that the duty was paid by the assessee prior to the issuance of show cause notice. Aggrieved by the said order of the Tribunal, the Revenue filed appeal.
Held:
The High Court referred to the decision of Apex Court in the case of Union of India vs. Rajasthan Spg. and Wvg. Mills 2009 (238) E.L.T. 3, in which it was stated that, mere payment of differential duty whether before or after the show cause notice would not alter the situation and there would be liability towards penalty in case the conditions for imposing such penalty spelt out in section 11 AC of the Act are attracted. Relying upon the same, the High Court held that, the question of exonerating the assessee from payment of penalty does not arise and answered the question of law in favour of revenue.
