2010 (3) TMI 698 - HC - Central Excise

Penalty - subject to the condition that if the interest and penalty is paid within 30 days from the date of receipt of the order, the penalty shall stand reduced to 25% - assessee had deposited the duty prior to issuance of the said show-cause notice - Held that - no factual foundation has been laid by the appellant before the Tribunal to point out that such amount had not been deposited as required with the provisions of Section 11AC - In absence of any factual foundation having been laid, it would not be possible for this Court to accept the contention that the amount of penalty could not have been reduced to 25% as the interest and penalty had not been paid within the prescribed period - appeal is dismissed

Summary

Issues:
Reduction of penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 based on deposit of confirmed duty before issuance of show cause notice.

Analysis:
The case involved the appellant-Revenue questioning the reduction of a mandatory penalty imposed under Rule 25 of the Central Excise Rules, 2002, read with Section 11AC of the Central Excise Act, 1944. The respondent, engaged in manufacturing man-made fabrics, faced a show-cause notice for recovery of Central Excise duty, interest, and penalties. The adjudicating authority demanded duty, interest, and imposed penalties, with the penalty reduced by 25% if paid within 30 days. The Commissioner (Appeals) upheld the order but set aside penalties on the partners. The respondent appealed to the Tribunal, which confirmed the duty payment and reduced the penalty to 25% of the duty amount due to pre-show-cause notice duty deposit.

The appellant argued that the duty payment before the notice was not voluntary but a result of a search, citing precedents to support that Section 11AC applies even if the amount is paid post-seizure. The appellant contended that the Tribunal erred in reducing the penalty without considering non-compliance with Section 11AC provisos. However, the Tribunal's order was based on the duty payment before the notice and the adjudicating authority's penalty reduction condition, indicating compliance with Section 11AC provisions. As the appellant failed to prove non-payment of interest and penalty within the specified period, the Court found no grounds to dispute the penalty reduction to 25%.

Consequently, the Court dismissed the appeal, finding no flaws in the Tribunal's decision. The judgment emphasized the importance of complying with Section 11AC provisions and upheld the penalty reduction based on the duty payment timing, maintaining that no substantial legal question arose from the Tribunal's order.