UNION OF INDIA Vs. RAJASTHAN UDYOG

JUDGEMENT

(1.) Heard the learned counsel for the appellant. This appeal is directed against the order dtd.19.7.2004 passed by the Customs Excise and Service Tax Appellate Tribunal.

(2.) By the impugned order the Tribunal has deleted the penalty levied under Section 11 AC of the Central Excise Act, 1954 holding as under: The appellants are not disputing their duty liability and we observe that even in January, 2000 when they had cleared the machines in CKD Condition they had paid an amount @10% of the price of the goods under the belief that they could send the same for the purpose of testing to their customers under Rule 57F(4) of the Central Excise Rules, 1944. They, after receipt of the goods from their customers, had again cleared the same on payment of appropirate duty. Thus, there has been only some delay in payment of duty on account of mistaken belief of the Appelalnts that the goods could be cleared for the purpose of testing without payment of full duty. It is not disputed that the entire duty has been paid by the Appellants at the time of removal of the goods in August, 2000. Larger Bebnch of the Tribnal has also held in the case of CCE, Delhi- III V/s Machine Montel (I) Ltd. - 20054 (160) ELT 464 (T-LB) that where duty amount has been paid by the assessee before issuance of the show cause notice, no penalty can be imposed under Section 11AC of the Central Excise Act. In the facts and circmstnaces of the present case, we hold that no penalty is imposable on any of the Appellants. We, therefore, set aside the penalties imposed on them. The contentino of the appellant is that the Tribunal has erred in waiving and reducing the penalty as penalty leviable under Section 11AC is absolutely mandatory and does not leave any discretion with the assessing officer not to levy the penalty.

(3.) The question that has been suggested by the Revenue in this appeal reads as under: Whether the learned Tribunal is right in law in setting aside the mandatory penalty imposed as equal to the amount of duty, not paid during the period of delay, imposed under Section 11AC of the Act, 1944 on the assessee.