2008 (11) TMI 496 - AT - Central Excise

Summary

Issues:
1. Enhancement of penalty under Section 11AC to 100% of the duty short levied.
2. Imposition of penalty equal to duty, reducible to 25% if paid within 30 days.
3. Interpretation of penalty imposition under Rule 25 and Section 11AC.
4. Availability of the option for payment of reduced penalty within 30 days.

Analysis:
1. The appeal concerned the Revenue seeking an increase in penalty under Section 11AC to 100% of the duty short levied. The Commissioner (Appeals) had initially imposed a penalty equal to the duty but allowed for a reduction to 25% if paid within 30 days along with interest on duty.

2. The respondent's representative relied on a judgment of the Hon'ble Delhi High Court and a circular issued by CBEC to support the contention that the penalty should be reduced to 25% if paid within 30 days. The consultant argued against the imposition of a composite penalty under Rule 25 and Section 11AC, citing decisions from the Tribunal Mumbai.

3. The Tribunal analyzed the penalty imposition, concluding that it was correctly done under Section 11AC, and the mention of "Rule 25 read with Section 11AC" by the Commissioner (Appeals) was appropriate. The Tribunal found no issue with the penalty imposition and clarified that Rule 25 of the Central Excise Rules mandates penalty imposition subject to provisions under Section 11AC.

4. Regarding the availability of the option for payment of 25% of the penalty within 30 days, the Tribunal noted that the circular issued by the Board supported the case. As the appellant had paid 25% of the penalty within the stipulated time frame along with interest on duty, the respondent was deemed entitled to the benefit. Consequently, the appeal filed by the Revenue seeking an increase in penalty was rejected. The judgment was pronounced in court on 4th November 2008.