2007 (1) TMI 382 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty lesser than confirmed duty amount.
2. Interpretation of Section 11AC of the Central Excise Act, 1944.
3. Payment of duty prior to the issue of show cause notice affecting penalty imposition.

Analysis:
1. The issue in this case revolves around the imposition of a penalty of Rs. 15,000 on the respondents, which is less than the confirmed duty amount of Rs. 1,85,348. The Revenue challenges this decision, arguing that the penalty should have been equal to the duty amount as per Section 11AC of the Central Excise Act, 1944.

2. The Tribunal considered the interpretation of Section 11AC in light of relevant precedents. The Revenue relied on a decision by the Hon'ble Punjab & Haryana High Court, emphasizing that when penal action is warranted, the penalty under Section 11AC must be equal to the confirmed duty amount. However, the Tribunal noted a contradictory judgment from the Hon'ble Bombay High Court in a similar case, where it was held that Section 11AC does not apply if duty is paid before the show cause notice is issued.

3. In this case, the respondents had paid the entire duty amount before the show cause notice was issued, following detection by the Central excise authorities. The Tribunal found that the Bombay High Court's decision on the non-applicability of Section 11AC in such circumstances applied directly to this case. Additionally, the respondents had filed cross objections contesting the penalty imposition. Consequently, the Tribunal set aside the penalty, citing the Bombay High Court's decision and concluding that no enhancement in the penalty amount was warranted.

4. The Tribunal disposed of the appeal by ruling in favor of the respondents, setting aside the penalty imposed and determining that no further consideration for increasing the penalty was necessary. The judgment was pronounced in court on 31-1-2007.