By TIOL News Service

MUMBAI, MAR 14, 2014: REVENUE is in appeal against the order passed by the Commissioner(Appeals) wherein he has dropped the mandatory penalty imposed u/s 11AC r/w Rule 25 of the CER, 2002 by the adjudicating authority on the premise that provisions of section 11AC has not been attracted in the show-cause notice.

The Revenue representative submitted that in the case of Rajasthan Spinning & Weaving Mills (2009-TIOL-63-SC-CX), the Apex Court has held that although duty and interest has been paid before issuance of show-cause notice the assessee is required to pay mandatory penalty.

The respondent assessee was not represented.

The Bench observed -

"4. The understanding of the ld. AR is not correct. As per the decision of Rajasthan Spinning & Weaving Mills (supra), the Apex Court has held that if the ingredients of Section 11AC of the Act have been attracted, then the mandatory penalty under section 11AC is imposable. Admittedly, there is no allegation of fraud, collusion, willful mis-statement, suppression of fact or contravention of provisions with intent to evade payment of duty against the respondent. Therefore, provisions of section 11AC is not attracted. In the absence of such an allegation, penalty is not imposable."

In fine, the order of the Commissioner(A) was upheld and the Revenue appeal was dismissed

(See 2014-TIOL-398-CESTAT-MUM)