2011 (6) TMI 74 - AT - Central Excise

Penalty - Reduction of penalty - where no such option has been extended by the lower authorities, the same can be extended by the Tribunal - Extend the option to the appellant to deposit entire duty, interest and 25% of the penalty within a period of 30 days from the date of passing of the present order, in which case the penalty shall stand reduced to 25% of the duty.

Summary

Issues:
1. Imposition of penalty under Section 11AC of Central Excise Act, 1944.
2. Interpretation of SSI exemption scheme for duty-free clearance.
3. Challenge against penalty imposition based on bonafide impression.
4. Application of legal precedent on penalty imposition.
5. Reduction of penalty amount based on payment within specified time.
6. Levying of interest under Section 11AB despite duty payment before Show Cause Notice issuance.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, Ahmedabad concerned the imposition of penalty under Section 11AC of the Central Excise Act, 1944. The Revenue challenged the Commissioner (Appeals) order that set aside the penalty while confirming the duty demand of Rs.23,32,615/- on the respondent, who was engaged in manufacturing Prestressed Concrete Poles under a specific exemption scheme.

2. The respondents availed the SSI exemption Notification No. 8/2003-CE, which allowed duty-free clearance up to Rs.1 crore with a condition not to exceed Rs.3 crores in the previous year. Central Excise officers found excess clearance beyond the exemption limit, leading to the duty demand and penalty imposition by the original adjudicating authority.

3. The respondents contended before the Commissioner (Appeals) that their actions were based on a bonafide belief that the SSI exemption allowed duty-free clearance of Rs.3 crores in a financial year. They cited the law declared in the case of CCE Delhi Vs. Machino Montell (I) Ltd. to argue against penalty imposition after voluntarily paying the duty before the Show Cause Notice.

4. The Appellate Tribunal referred to the legal precedent set by the Hon'ble Supreme Court in the case of Dharmendra Textile Processors, which mandated a 100% penalty on the duty amount. Consequently, the Tribunal restored the original adjudicating authority's order imposing a 100% penalty but provided an option to reduce the penalty to 25% of the duty amount if the entire dues and penalty were paid within 30 days.

5. The Tribunal extended the option for penalty reduction to the appellant, citing a previous case law where such an option was allowed by the Tribunal when not given by lower authorities. This decision aimed to balance the penalty imposition with the timely payment of dues, ensuring compliance with the statutory provisions.

6. Regarding the interest levied under Section 11AB, the Tribunal upheld the original adjudicating authority's decision, setting aside the Commissioner (Appeals) order that had waived the interest. The Tribunal agreed that interest was leviable despite the duty payment before the issuance of the Show Cause Notice, in accordance with the provisions of the Act.

In conclusion, the appeal filed by the Revenue was disposed of by the Appellate Tribunal CESTAT, Ahmedabad, with a detailed analysis and application of legal principles surrounding penalty imposition, exemption schemes, payment options, and interest levies under the Central Excise Act, 1944.