2009 (8) TMI 894 - AT - Central Excise

Summary

Issues involved: Imposition of penalty under Section 11AC of the Central Excise Act, 1944 when duty is paid before the issuance of show cause notice.

Main Issue: Imposition of penalty of Rs. 3,25,000/- under Section 11AC.

a) Whether penalty under Section 11AC can be imposed if duty is paid before show cause notice:
- The Revenue appealed for enhancement of penalty to the equivalent duty amount.
- The assessee contended that penalty is not imposable as duty was paid before show cause notice.

b) Quantum of penalty when duty is paid before show cause notice:
- The key question was determining the quantum of penalty under Section 11AC.

Judgment Details:
- The Tribunal referred to the case of Union of India v. Rajasthan Spinning & Weaving Mills where 100% penalty under Section 11AC was upheld even if duty is paid before the show cause notice.
- Section 11AC states that if duty and interest are paid within 30 days of the order, penalty is 25% of the duty amount, otherwise 100%.
- The purpose of the Section and provisos is to provide a benefit to the assessee for prompt duty payment.
- As the duty was paid before the show cause notice, the penalty was restricted to 25% of the duty demand of Rs. 5,67,934/-.
- The assessee was directed to pay the reduced penalty within 30 days, failing which 100% penalty would be applicable.
- Both the Revenue's and the assessee's appeals were disposed of on 28-8-2009.