S. 78 -Where mens rea stands accepted in relation to the demand of duty, it has to be accepted by the assessee vis-a-vis the proposal for imposition of penalty under section 11AC

Alloytech vs CCE

 

Whether penalty u/s 11AC of the Central Excise Act imposed on the assessee is sustainable or not ?

 

Held, The assessee has tacitly admitted their liability to have reversed the CENVAT credit at the time of removal of the capital goods. They also voluntarily paid interest under section 11AB. These payments cannot be accepted as payments under sub-section 2B of section 11A of the Act inasmuch as these were made under compulsion. Hence, the question of invoking Explanation 3 ibid does not arise. It is not in dispute that the show-cause notice invoked the extended period of limitation on the ground of suppression of facts with intent to avail undue CENVAT credit. The assessee did not choose to contest the demand on the ground of limitation, thereby virtually accepting the allegation of suppression. Their only grievance is against the penalty. The grounds for invoking the extended period of limitation are Indisputably identical to the grounds for invoking the section 11 AC. If that be so, where the demand has not been contested on the ground of limitation, it is not open to the assessee to oppose the section 11 AC penalty. In other words, where mens rea stands accepted in relation to the demand of duty, it has to be accepted by the assessee vis-a-vis the proposal for imposition of penalty under section 11AC. In the result, the penalty is unquestionable in this case.