2007 (2) TMI 378 - AT - Central Excise

Summary

Issues:
Challenge to order of Appellate Commissioner on penalty imposition, Cenvat credit disallowance, interest recovery, penalty amount, provisions of Section 11AC, reduced penalty @ 25%, duty deposit before show cause notice issuance.

Analysis:

The judgment concerns the challenge by the Revenue against the Appellate Commissioner's decision on penalty imposition. The Appellate Tribunal noted that the adjudicating authority disallowed Cenvat credit, ordered recovery of Rs. 1,03,360/- along with interest, and imposed a penalty of Rs. 25,840/-, which was 25% of the duty amount. The penalty was imposed in line with the first proviso to Section 11AC, which allows for a reduced penalty if duty and interest are paid within thirty days of the order determining such duty. The Revenue did not contest this reduced penalty. However, the Commissioner set aside the penalty based on the argument that the duty amount was deposited before the show cause notice was issued.

The Tribunal referred to a previous case where a similar issue arose, emphasizing that payments made within 30 days as per the first proviso to Section 11AC result in a reduced penalty of 25% of the duty determined. The Tribunal highlighted that this provision aims to encourage prompt payment of duty and interest amounts. It clarified that in cases where payments are made within the stipulated period, there is no basis for imposing a penalty equal to the duty determined. The judgment underscored that the benefit of reduced penalty under the first proviso is applicable if the penalty amount has been paid within the thirty-day period, as done in the present case.

Based on the above analysis, the Tribunal concluded that the Commissioner erred in setting aside the penalty imposed by the adjudicating authority. The order of the Commissioner was overturned, and the penalty of 25% of the duty amount, already deposited by the appellant, was upheld. Consequently, the Tribunal disposed of the appeal, affirming that no further penalty was warranted as the required penalty amount had been paid within the specified timeframe. The judgment was dictated and pronounced on 8-2-2007.