FA 475/10 1 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD FIRST APPEAL NO.475/2010 _______________________________________________________ Office Notes, Office | Memoranda of Coram, | Court's or Judge's orders appearances, Court's | orders or directions | and Registrar's orders | Dr.Mrs.Kalpalata Bharaswadkar, Advocate for appellant. Shri S.P. Deshmukh, Advocate for respondent. CORAM: D.B. BHOSALE & R.M. BORDE, JJ. Date: 04.02.2011 Heard learned counsel for the parties. In this appeal, the appellant/Revenue has framed the following question of law. “Whether Section 11AC of Central Excise Act, 1944, inserted by Finance Act, 1996, with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is scope for levying penalty below the prescribed minimum ?” The Commissioner (Appeals) in the appeal filed by the respondent-assessee allowed the appeal and in paragraph 6 thereof, has made the following observations: FA 475/10 2 “I have carefully gone through the records of this appeal, the written as well as oral submissions of the appellant and also heard the submission during the course of personal hearing. The demand notice, in the instant case has been issued on account of short payment of duty. The appeal is for waiver of penalty imposed under Section 11AC of CESA, 1944. It is my considered view that short payment has arisen in view of a mistake in accounting procedure adopted and also due to ignorance of updated laws. Considering the history of payments made to the exchequer by the appellant, the intention to evade is not evident in this case. It is also possible that the appellant was not aware of the Board’s Circular No.813/10/2005 CX dtd. 25.04.2005. Hence, lenient view can be taken. In any case penalty under Section 11AC is not attracted in this case, in view of absence of mes rea. Department also has not been able to produce evidence that the act of short payment was premeditated and carried out with an intention to evade duty, as contemplated under Section 11AC of Central Excise Act, 1944. Further duty & interest have been paid before issue of SCN also.” The Tribunal, in the appeal filed by the Revenue, has observed that the finding on the point of criminal intention / mens rea has not been challenged by the Revenue in the grounds of appeal. Then the Tribunal has further observed that the conditions / requirements laid down u/s 11AC for the penalty to be imposed thereon, were not FA 475/10 3 satisfied in the present case in view of the finding recorded that there was no suppression or intention to evade the duty. We do not see any reason to interfere with the finding of facts recorded by the Tribunal and the Commissioner (Appeals). The Apex Court in the case of Commissioner of Central Excise V/s Pepsi Foods Ltd. (2010) 260 ELT 481 (SC) has held that Section 11AC applies only if there is criminal intent or mens rea. Hence, we see no merit in the appeal and the same is dismissed. (R.M. Borde, J.) (D.B. Bhosale, J.) Dt/- 04.02.2011 ndk/c421111