At, High Court of Himachal Pradesh
By, THE HONOURABLE MR. JUSTICE DEEPAK GUPTA & THE HONOURABLE MR. JUSTICE SANJAY KAROL
For the Appearing Parties: Sandeep Sharma, M.M. Khanna, Vayur Gautam, Advocates.
DEEPAK GUPTA, J.
(1.) This appeal was admitted on the following substantial question of law :-
"Whether penalty under Section 11AC of Central Excise Act, 1944 can be imposed, if the party deposits the duty before issue of show cause notice but only after detection by the department or on pointing out by the department?"
(2.) As far as this question of law is concerned, the same has been answered in favour of the revenue by this Court in two cases i.e. C.E.A. No. 9 of 2006 titled as Commissioner of Central Excise, Chandigarh versus M/s. Him Chemicals and Fertilizers Limited , decided on 16.09.2009 and C.E.A. No. 8 of 2006 titled as Commissioner of Central Excise, Chandigarh versus M/s. Ruchira Papers Limited, decided on 04.11.2009. In Him Chemicals' case, after quoting the provisions of Section 11AC of the Excise Act and taking note of the decision of the Apex Court in Sony India Ltd. v. Commissioner of Central Excise, Delhi, 2004 (167) ELT, 385(SC), this Court held as follows:-
"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. It would be apposite to refer to a judgment of the Apex Court delivered in Sony India Ltd. (supra) wherein the Apex Court held that where the assessee is guilty of taking an action which is not bonafide then penalty can be imposed. This would also be in consonance with the settled principle of law that a person who is guilty of trying to evade duty by malafide methods should not be given the benefit of not having to pay penalty when his clandestine and mala fide acts are discovered by the revenue. In view of the above, applicability of Section 11AC is not excluded merely on deposit of the amount after having been caught but before the issuance of show cause notice."
(3.) Mr. M. M. Khanna, Learned Senior Counsel for the respondent urged that the authorities below have not gone into the question as to whether the case fell within the purview of Section 11AC and other corresponding provisions of the Act.
(4.) The question as to whether penalty should be imposed or not is a question of fact. Since this question has not been determined by the Assessing Officer, Commissioner (Appeals) or the Tribunal whose decisions are based only on the consideration that the excise duty was deposited prior to the issuance of the show cause notice, we set-aside the orders of the said authorities and remand the case back to the Assessing Officer for fresh decision on the issue of penalty after determining the question whether the non-payment of duty in the present case was on ac
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count of fraud, collusion or any willful mis- representation or suppression of facts or contravention of any of the provisions of the Excise Act or the Rules made thereunder with intention to evade payment of duty as laid down under Section 11AC. (5.) The appeal is disposed of in the aforesaid terms. No costs.