COMMISSIONER (LTU), BANGALORE Vs. ACE DESIGNERS PVT. LTD.

JUDGEMENT

(1.) This appeal is by the revenue challenging the order passed by the Tribunal which held that benefit granted by the Commissioner of Appeals in terms of the Board's circular is in order and that as the duty had been paid before the issue of show cause notice, no penalty could be imposed under the Act.

(2.) The dispute between the parties relate to three items : (1) benefit to which the assessee is entitled to, in terms of the Board's circular, (2) payment of penalty, and (3) payment of interest.

(3.) It is not in dispute that though the assessee did not pay the duty as and when it became due, before the issue of show cause notice he paid the duty to avoid payment of penalty if any, as the law stood then. He claimed the benefit in terms of the Board's circular as at any rate, Board is estopped from contending to the contrary. Similarly, he denied the liability to pay interest. When the law being laid down by the Apex Court to the effect that before the penalty is imposed under the Act, the condition prescribed under the Section have to be fulfilled. Once it is fulfilled, then imposition of penalty is automatic. If the duty had been paid prior to the issue of show cause notice, the view that prevailed at that point of time was that no penalty could be imposed. Now that is not found favour by the Apex Court. The question is not when the duty is paid, but the question is to avoid liability to pay penalty whether the conditions prescribed in Section 11AC of the Act exist or not. Therefore, whether duty is paid prior to the show cause notice or after the show cause notice goes to the background.