ORDER
P.G. Chacko, Member (J)
1. The original authority, in adjudication of a show-cause notice demanded duty from the assessee and imposed on them the following penalties :
(a) Rs. 38,400/- under Section 11AC of the CE Act, 1944.
(b) Rs. 37,726/- under Rule 57-1 read with Section 11 AC.
The authority also ordered levy of interest on duty from the assessee under Section 11AB of the Act. The Order was passed after noting the fact that the entire amount of duty had been paid by the assessee prior to thg date of issue of the show-cause notice. The assessee’s appeal against the Order of the original authority was allowed by the Commissioner (Appeals). Hence the present appeal of the Revenue.
2. After hearing both sides and considering their submissions, I find that the simple issue arising for consideration is whether Section 11AC and Section 11AB were liable to be invoked, respectively, for imposing penalty on the assessee and for levying interest from them notwithstanding the fact that they had paid the entire amount of duty (for the period 13-1-99 to 23-6-99) prior to the date of issue of the relevant show-cause notice. According to learned SDR, the question should be answered in the affirmative in view of the following decisions :
(1) Zunjarrao Bhikaji Nagarkar v. UOI .
(2) Sainsons Paper Industries Ltd. v. CCE, reported in 2003 (178) E.L.T. 782 (Tri.-Del.)-
(3) Surie-Engg. Works v. CCE, New Delhi
(4) CCE, Indore v. Sai Machine Tools Ltd.
learned Counsel for the respondents has urged that the issue be answered in the negative in view of the following case law :
(1) Rashtriya Ispat Nigam Ltd. v. CCE, Visakhapatnam
(2) CCE, Madras v. Jkon Engineering (P) Ltd. reported in 2005 (67) RLT 157 (Mad.)
(3) CCE, Mangalore v. Shree Krishna Pipe Industries
(4) CCE v. Gaurav Mercantiles Ltd. .
3. After considering the decisions cited before me, I find that the issue raised in this case needs to be answered in the negative. In the case of Rashtriya Ispat Nigam Ltd. v. CCE, Visakhapatnam (supra), it was held by a regular bench of this Tribunal that, where duty had been deposited before the issue of show cause notice, no penalty was imposable on the assessee under Section 11AC of the Act. The appeal filed against the Tribunal’s decision”b{ thg department was dismissed by the Hon’ble Apex Court vide 2004 (163) E.L.T. A53 (S.C.). Thus the general proposition of law thct. where duty had been deposited prior to issuance of show-cause notice, there shall be no penalty on the assessee under Section 11 AC stood approved by the Hon’ble Supreme Court. The law so laid down was followed by the Karnataka High Court in the case of CCE, Mangalore v. Shree Krishna Pipe Industries (supra) wherein it was held that, where assessee deposited duty prior to issue of show-cause notice, penalty should not be imposed under Section 11AC and interest should not be levied under Section 11AB. The main ground raised by the appellant in this case is that, as payment of duty was made only after detection, by the department, of evasion of duty by the party, such payment was not voluntary and, therefore, the penal provisions of Section 11 AC stood attracted. It appears that similar circumstances were considered by the Bombay High Court in the case of CCE v. Gaurav Oercantiles Ltd. (supra) and”it was still held that no penalty under Section 11AC was imposable where duty had been paid prior to issue of show-cause notice.
4. In the case of Zunjarrao Bhikaji Nagarkar v. UOI (supra), cited by the learned SDR, I have found nothing in the Apex Court’s judgment to support the present appellant’s plea. In the case of Surie Engg Works (supra), it was held that duty deposited by a party after being caught by the department could not be said to have been voluntarily deposited and that, in such circumstances, penalty was imposable under Section 11AC. After examining the provisions of Section 11AC, 1 find that the circumstances specified thereunder for imposition of penant{ are non-payment of duty by way of –
(a) Fraud
(b) Collusion
(c) Suppression or mis-statement of facts with intent to evade payment of duty Involuntary payment of duty does not necessarily involve any of these elements. Hence I am unable to link the factum of involuntary payment of duty before the issue of show cause notice with Section 11AC. The decision cited by the learned SDR is apparently per incuriam. The same is the position with regard to the other case i.e CCE v. Sai Machine Tools Ltd. (supra) cited by the learned SDR.
5. In the result, the impugned Order vacating the penalties as well as the prmpmsal fmr levy of interest has to be sustained in law and on facts. It is ordered accordingly and the appeal is dismissed.
(Dictated and pronounced in open Court)