Penalty

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Anil Kumar Vyas (Querist)
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10 February 2015 Dear All Experts,

My query regarding penalty on custom duty short paid.

We was paying custom duty @ 5% on an imported goods.
one day anti evasion team come and draw samples of material.
before receive any demand or notice from department we have paid differential duty with interest on basis of right tariff classification of material.
Now department asking for pay penalty @ 25%.

All the experts have request to tell, Are we liable to pay penalty on said differential duty?

Thanks

Mohit Singla

Mohit Singla (Expert)
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10 February 2015 You can refer the below mentioned case in case of Service Tax
"CCE & ST Vs. Adecco Flexione workforce solutions ltd. 2012 STR 3 Karnataka High Court"
I hope your query will get resolved

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Anil Kumar Vyas

Anil Kumar Vyas (Querist)
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10 February 2015 Dear Sir,

I have read section 11A of Central Excise Act 1944, as per this section:
As per Sub Section 1 & 2 of Section 11A of Central Excise Act 1944:

Sub Section 1: Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,—

(a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;

(b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,—

(i) his own ascertainment of such duty; or

(ii) duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA.

Sub Section 2: The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under

the provisions of this Act or the rules made thereunder.

As per Sub Section 4,5 & 6 of Section 11A of Central Excise Act 1944:

Sub Section 4: Where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, by the reason of—

(a) fraud; or

(b) collusion; or

(c) any wilful mis-statement; or

(d) suppression of facts; or

(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,

by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice.

Sub Section 5: Where, during the course of any audit, investigation or verification, it is found that any duty has not been levied or paid or short-levied or short-paid or erroneously refunded for the reason mentioned in clause (a) or clause (b) or clause (c) or clause (d) or clause (e) of sub-section (4) but the details relating to the transactions are available in the specified record, then in such cases, the Central Excise Officer shall within a period of five years from the relevant date, serve a notice on the person chargeable with the duty requiring him to show cause why he should not pay the amount specified in the notice along with interest under section 11AA and penalty equivalent to fifty per cent of such duty.

Sub Section 6: Any person chargeable with duty under sub-section (5), may, before service of show cause notice on him, pay the duty in full or in part, as may be accepted by him along with the interest payable thereon under section 11AA and penalty equal to one per cent of such duty per month to be calculated from the month following the month in which such duty was payable, but not exceeding a maximum of twenty-five per cent of the duty, and inform the Central Excise Officer of such payment in writing.

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