Per P.G. Chacko : In all these appeals filed by the Revenue, the appellant prays for imposition of penalties on the respondents under Section 11AC of the Central Excise Act. In all these cases barring appeal No. E/2949/06, the respondents had taken excess CENVAT credit which was detected by the department later on. Upon such detection of wrong availment of excess credit, the respondents reversed the credits and also paid interest thereon. Subsequently, show-cause notices were issued to them. In the case of M/s. Thermax Ltd., the original authority imposed penalty equal to the amount of CENVAT credit on the assessee under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act. In the case of M/s. Mather Platt Pump Ltd., the adjudicating authority imposed penalty on the party under Rule 15 of the CENVAT Credit Rules, 2004, without reference to Section 11AC of the Act. In the case of M/s. Sharayu Precisions, the adjudicating authority did likewise. In the remaining case of M/s. Avdhoot Paper Products (appeal No. E/2949/06), a short-payment of duty by the assessee for the period 2003-04 was detected by the department during scrutiny of ER-1 returns for the said period. The differential amount of duty with interest thereon was paid by the party on 30.8.2005. Subsequently, in a show-cause notice dated 9.12.2005, the department proposed, inter alia, to impose a penalty on the respondent under Rules 25 and 27 of the Central Excise Rules, 2002 read with Section 11AC of the Act. In adjudication of this notice, the original authority imposed a penalty equal to duty on the assessee under Section 11AC of the Act.

2. In all the above cases, appeals were preferred to the Commissioner (Appeals) by the respondents and the appellate authority set aside the penalties on the ground that the CENVAT credit in question was reversed or the differential amount of duty was paid prior to issuance of show-cause notice. The learned Commissioner (Appeals) relied on the Tribunal's Larger Bench decision in CCE Vs. Machino Montell (I) Ltd. 2004 (62) RLT 709 (CESTAT-LB)=2004 (168) ELT 466 (Tri.-LB), wherein it had been held that, where duty was paid before issue of show-cause notice, there was no question of imposing any penalty under Section 11AC or of levying any interest on duty under Section 11AB of the Act. Obviously, the learned Commissioner (Appeals) presumed that the penalties imposed in all the cases by the original authority were under Section 11AC of the Act, mindless of the fact that, in most of the cases, the penalties were imposed by the original authority under Rule 15, without reference to Section 11AC.

3. In most of these cases, the respondents filed written submissions styled as "cross objections". M/s. Avdhoot Paper Products, for whom there is no representation today, have also done so. The counsel for the other respondents have reiterated the respective submissions contained in the statements of "cross objections". The learned JDR has reiterated the grounds of these appeals, which are in identical terms. I have considered the submissions and arguments. Case law has been cited by both sides and the same also has been considered.

4. As rightly pointed out by the learned counsel for the respondents, none of the ingredients for a penalty under Section 11AC was expressly alleged in any of the show-cause notices. It is settled law that, where the department seeks to penalize a person on any of the grounds covered by the text of Section 11AC, they have necessarily got to allege such grounds and prove the same in adjudication of the case. In the absence of allegation of fraud, collusion, suppression of facts, wilful mis-statement of facts or contravention of rules with intent to evade payment of duty by the respondents, there can be no penalty on the respondents under Section 11AC of the Act. In the cases of UOI vs. Dharmendra Textile Processors 2008 (89) RLT 103 (SC)=2008 (231) ELT 3 (SC) and UOI vs. Rajastha