2009 (1) TMI 717 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposition on the appellant.
2. Challenge against the duty demand of Rs. 108.
3. Applicability of Section 11A(2B) and proviso to Section 11AC.
4. Benefit of first proviso to Section 11AC for penalty imposition.

Analysis:

Issue 1: Duty demand and penalty imposition on the appellant
The appellant, a processor of Man Made Fabrics, was found to have issued debit notes to principal manufacturers without paying duty or reflecting them in ER-I returns. The Deputy Commissioner confirmed duty demand of Rs. 57,233 and imposed penalties under Section 11AC on the appellant company and its director. The Commissioner (Appeals) upheld this order. The appellant challenged the penalty and duty demand of Rs. 108 in the present appeal.

Issue 2: Challenge against the duty demand of Rs. 108
The appellant argued that the duty demand of Rs. 108 was already included in the total duty paid of Rs. 57,233. They contended that no separate demand for Rs. 108 should have been made. The Tribunal agreed with the appellant, finding that the entire duty had been paid before the issue of show cause notice, rendering the demand for Rs. 108 unnecessary.

Issue 3: Applicability of Section 11A(2B) and proviso to Section 11AC
The appellant claimed that Section 11A(2B) should apply or, alternatively, they should benefit from the proviso to Section 11AC since the duty was paid before the show cause notice. However, as the debit notes were not declared in ER-1 returns, the Tribunal found the appellant guilty of suppression of facts, making Section 11A(2B) inapplicable. The appellant sought the benefit of the 1st proviso to Section 11AC.

Issue 4: Benefit of first proviso to Section 11AC for penalty imposition
The first proviso to Section 11AC allows for a reduced penalty if duty and interest are paid within 30 days of the order determining duty. As the duty demand was paid in full before the show cause notice, the Tribunal held that the appellant qualified for the benefit of the first proviso to Section 11AC. Therefore, the penalty imposed was reduced to 25% of the duty amount, in line with the High Court's precedent.

This detailed analysis of the judgment highlights the key arguments, findings, and legal principles applied by the Tribunal in resolving the issues raised by the parties involved in the case.