2009 (3) TMI 849 - AT - Central Excise

Summary

Issues:
1. Appeal against order confirming demand for rebate based on fake shipping bills.
2. Imposition of penalties under Central Excise Rules and Customs Act.
3. Benefit of 25% penalty on payment within 30 days of order.
4. Interpretation of penalty provisions under Section 11AC.

Analysis:
1. The appellants challenged the order confirming the demand for rebate on the basis of fake shipping bills. The Commissioner upheld the Order-in-Original, imposing penalties on the company and its director. The appellants argued that the rebate with interest had already been paid during the investigation. The issue raised was whether the benefit of 25% penalty on payment within 30 days of the order should be extended to them, citing a decision of the Hon'ble High Court of Delhi in a similar case.

2. The LD. DR opposed the appellants' contention, citing the Hon'ble Supreme Court's ruling that penalty under Section 11AC is mandatory. Failure to pay duty, interest, and penalty within 30 days attracts a penalty of 100%. The LD. DR argued that there was no requirement for specific mention in the order, as per the provisions under Section 11AC. However, the Tribunal found merit in the appellants' arguments and referred to the observations of the Hon'ble High Court of Delhi in a related case.

3. The Hon'ble High Court of Delhi's observations highlighted the importance of considering the Assessee's bona fides and the impact of incorrect penalty imposition. The Court emphasized that if the correct penalty had been imposed, the Assessee would have paid it within the prescribed time. The Tribunal, respecting the High Court's order, ruled that if the appellant-company pays the penalty within 30 days, the penalty shall be limited to 25%. The penalty imposed on the Director under Rule 27 was to remain.

4. The judgment clarified the interpretation of penalty provisions under Section 11AC, emphasizing the need to consider the Assessee's intentions and the legality of penalty imposition. By following the High Court's order, the Tribunal balanced the imposition of penalties, ensuring fairness and compliance with statutory provisions. The appeal was partially allowed, granting relief to the appellants in line with the High Court's observations.

*(Pronounced in the Court on 3-3-2009)*