2007 (7) TMI 529 - AT - Central Excise

Summary

Issues involved: Application for modification/rectification of Final Order regarding penalty under Section 11AC of Central Excise Act.

Summary:
1. Issue of Penalty under Section 11AC:
The applicant sought modification of the Final Order upholding penalty equal to the amount of demand imposed under Section 11AC. Applicant argued that penalty under Section 11AC is not imposable if duty has been paid prior to the show-cause notice. However, as excisable goods were cleared without payment of duty and found outside the factory, the Tribunal held that penalty under Section 11AC is applicable due to contravention of Act provisions.

2. Quantum of Penalty and Legal Precedents:
Applicant relied on the decision of Delhi High Court in CCE v. Malbro Appliances Pvt. Ltd. where a penalty almost equal to 25% of duty was upheld under the proviso to Section 11AC. The proviso states that penalty shall be 25% of the duty determined if paid within 30 days from the communication of duty order. As the penalty was not paid within the specified time, the benefit of reduced penalty was not applicable. The Tribunal, following the decision in CCE, Delhi v. ILPEA Paramount Pvt. Ltd., held that if liable for penalty under Section 11AC, the Tribunal cannot reduce the penalty unless duty, interest, and penalty are paid within 30 days.

3. Final Decision:
The Tribunal found no mistake in the Final Order requiring rectification or modification as the penalty was not paid within the specified time frame. The application for modification/rectification was dismissed.

*(Dictated & pronounced in open Court)*