2009 (6) TMI 905 - AT - Central Excise

Summary

Issues involved: Appeal against reduction of penalty by Commissioner (Appeals) u/s 11AC of the Central Excise Act, 1944.

Summary:
The appeal was filed by Revenue against the order of the Commissioner (Appeals) where the penalty was reduced. The case involved the detection of shortage of finished goods involving central excise duty, which was accepted by the Director of the respondent and the duty was deposited. The Original Authority confirmed the duty demand and imposed a penalty under Section 11AC. The Commissioner (Appeals) reduced the penalty, leading to the Revenue's appeal for enhancement of penalty equal to the duty amount.

Upon hearing both sides, it was found that the goods were removed clandestinely without payment of duty, justifying the imposition of penalty under Section 11AC. The argument that there was no evidence of clandestine removal was countered by the fact that the goods were cleared without duty payment. Reference was made to the Hon'ble Delhi High Court case regarding penalty imposition when duty is paid before the show cause notice. The Tribunal upheld the reduction of penalty to 25% of the duty amount by the Commissioner (Appeals) as per the 1st Proviso to Section 11AC.

Ultimately, the Tribunal rejected the Revenue's appeal, stating that there was no reason to interfere with the Commissioner (Appeals) order, as the penalty reduction was justified based on the circumstances of the case.