2011 (2) TMI 27 - AT - Central Excise

Penalty - Clandestine removal - appellants prepared invoices and cleared the goods which were entered in their production records - appellants shown credit in PLA while no deposit of corresponding amount has been made - It was claimed that based on oral instructions about payment of duty in the challans, they took credit which was admittedly a mistake - entire duty including interest paid before issue of show cause notice - prayer of the appellants for giving option to pay concessional penalty of 25% of duty involved in terms of proviso to Section 11AC deserves to be accepted

Summary

Issues:
1. Appellant defaulted in duty payment for specific periods.
2. Show cause notice issued proposing duty confirmation and penalty imposition.
3. Dispute regarding penalty imposition under Section 11AC.
4. Appellants claimed option for concessional penalty.
5. Discrepancy in credit entries in PLA without actual payment.
6. Appellants' request for concessional penalty granted.

Analysis:
The appeal was against an order of the Commissioner (Appeals) regarding duty payment defaults for specific periods. The appellant had failed to pay duty for certain fortnights but later paid the amount along with interest before a show cause notice was issued. The dispute mainly revolved around the penalty imposed under Section 11AC of the Central Excise Act. The appellant argued for the option to pay a concessional penalty of 25% of duty involved, citing a decision of the Hon'ble High Court of Gujarat. The appellant had cleared goods based on invoices and production records, although credit entries in PLA were made without corresponding actual deposits, leading to a discrepancy.

The Tribunal noted that while the situation did not amount to clandestine removal, the discrepancy in credit entries was an error. The entire duty along with interest had been paid before the show cause notice was issued. Considering these circumstances, the Tribunal agreed with the appellant's request for the option to pay a concessional penalty. The appeal was disposed of by upholding the penalty imposed under Section 11AC but granting the appellant the choice to pay a reduced penalty amount within a specified time frame. Failure to pay within the given time would result in a higher penalty amount.

In conclusion, the Tribunal acknowledged the appellant's payment of duty and interest before the show cause notice and allowed the option for a concessional penalty, emphasizing the importance of accurate record-keeping and payment compliance in excise matters.