2011 (5) TMI 210 - AT - Central Excise

Quantum of Penalty - Clandestine removal - Prayer is to reduce the penalty - Lower authorities should have extended an option to the appellant to deposit the entire dues along with 25% of the penalty within 30 days from the date of passing of the order, in terms of provisions of proviso to Section 11AC, in which case, the penalty shall stand reduced to 25% of the amount - The Tribunal, in the case of M/s Swati Chemicals & others and Hon ble High Court of Gujarat in the case of M/s Exotic Associates Vs. CCE, has held that where no such option is extended by the lower authority, the same can be extended by higher appellate forum - It is made clear that failure to deposit the above penalty, will result in upholding the penalty of 100% imposed by the lower authority.

Summary

Issues: Duty confirmation on appellant for clandestine removal, penalty imposition under Rule 25 instead of Section 11A, extension of deposit option for penalty, reduction of penalty to 25% of the amount.

In this judgment by the Appellate Tribunal CESTAT, Ahmedabad, the duty of Rs.5,05,967/- was confirmed against the appellant, a manufacturer of non-alloy steel ingots, cast articles, and CTD bars, based on allegations of clandestine removal supported by entries in private records and statements of representatives. The appellant did not contest the duty demand already paid but sought a reduction in the penalty imposed under Rule 25 of the Central Excise Rules, 2002. The Tribunal noted that the penalty should have been imposed under Section 11A, and the appellant should have been given the option to deposit the dues along with 25% of the penalty within 30 days to reduce the penalty to 25% of the amount, as per the proviso to Section 11AC. Referring to previous judgments, the Tribunal held that the higher appellate forum could extend this deposit option if not provided by the lower authority.

Regarding the penalty imposition under Rule 25, the Tribunal, following the precedent set in previous judgments, reduced the penalty to 25% of the amount in question. The appellant was directed to deposit this reduced penalty along with interest within 30 days, failing which the penalty would remain at 100% as imposed by the lower authority. The judgment emphasized the importance of timely payment to benefit from the reduced penalty, highlighting the consequences of failure to comply.

The appeal was disposed of with the decision to reduce the penalty to 25% of the amount, subject to the appellant depositing the specified amount within the given timeframe. The judgment underscored the significance of adherence to the payment terms to avoid the reinstatement of the higher penalty initially imposed.