2011 (1) TMI 83 - AT - Central Excise

Demand - whether the concessional penalty as provided in terms of proviso to section 11AC could be extended or not - non-speaking order is passed by the Tribunal - penalty levied under Section 11AC and when the duty amount paid before issuance of show cause notice, the penalty reduced to 25% of the duty amount - in the absence of option being given by the lower authorities, the option had been granted to pay the duty amount, interest and the reduced penalty

Summary

Issues:
- Denial of credit for a specific period
- Dispute over penalty payment options under section 11AC

Analysis:
1. Denial of Credit: The appellant was denied credit of Rs.2,60,081 for the period July 1996 to January 1998 on the grounds of failure to prove that the goods were received and utilized in the manufacture of excisable goods. The appellant did not contest the duty demand but raised concerns regarding the penalty payment options.

2. Penalty Payment Options: The appellant's advocate argued that neither the original authority nor the Commissioner (Appeals) provided the option to pay a reduced penalty as per the proviso to section 11AC. Citing relevant court decisions, the advocate sought the Tribunal's intervention to grant the option for reduced penalty payment. The Tribunal considered the submissions from both sides and acknowledged that the duty demand was not disputed. The key issue was whether the concessional penalty under section 11AC could be extended.

3. Court Precedents: The Tribunal referred to the decision of the Hon'ble High Court in a similar case involving Harish Silk Mills, where it was established that if the duty amount with interest is not paid on time and the reduced penalty is not paid, the option should be given to the assessee. The court emphasized that the period of 30 days for payment should commence from the date of granting such option. In line with this precedent, the Tribunal decided that the penalty payable by the appellant would be Rs.65,020.25, provided the balance of interest, if any, is paid within 30 days.

4. Disposition of the Appeal: The Tribunal confirmed the duty demand as uncontested and set the penalty at Rs.65,020.25, subject to timely payment of any remaining interest within 30 days. Failure to pay the balance interest within the specified period would result in a penalty of Rs.2,60,081. The judgment highlighted the importance of granting the option for reduced penalty payment and ensuring compliance with the specified timelines for payment of duty, interest, and penalties.