2011 (7) TMI 469 - AT - Central Excise

Penalty impose under 11AC - Respondents fairly agreed that confirmation of demand of duty Rs. 8,39,262/- by Commissioner (Appeal) has not been challenged by them. Similarly, there is no challenge/ contest to imposition of penalty under Section 11AC of the Central Excise Act, 1944 - Held that no option to pay 25% of the penalty, within a period of 30 days from the date of receipt of the order was extended by the lower authorities, in terms of provisos to Section 11AC, and the same can be extended to them now - Therefore option is given to the appellants to pay 25% of penalty along with duty and interest, within 30 days of passing of this order, in which case the penalty shall stand reduced to that amount.

Summary

Issues: Reduction of penalty under Section 11AC of the Central Excise Act, 1944 without challenge on demand of duty, discretion of authorities in imposing penalties, extension of option to pay 25% of penalty within 30 days.

The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved a case where the Revenue appealed against the reduction of penalty from Rs. 8,39,262 to Rs. 30,000 under Section 11AC of the Central Excise Act, 1944. The advocate for the respondents did not contest the confirmation of the duty demand or the imposition of the penalty. Referring to the Supreme Court's ruling in Dharmendra Textiles Processors, the Tribunal emphasized that authorities have no discretion to reduce penalties under Section 11AC, and the penalty should be 100% of the duty confirmed. Consequently, the Tribunal modified the order and increased the penalty to the extent of the duty confirmed against the respondents.

The Tribunal acknowledged that the lower authorities did not provide the option to pay 25% of the penalty within 30 days, as allowed by the provisos to Section 11AC. Citing the Tribunal's decision in the case of M/s. Swati Chemicals Industries & Others, the Tribunal extended the option to the appellants to pay 25% of the penalty along with duty and interest within 30 days of the order. If the appellants choose this option, the penalty amount would be reduced accordingly. This decision was made in line with the precedent set by the Tribunal in the Swati Chemicals case, ensuring fairness and compliance with the legal provisions.

In conclusion, the Tribunal disposed of the Revenue's appeal by increasing the penalty to match the duty confirmed against the respondents. The judgment highlighted the mandatory nature of penalties under Section 11AC and the importance of providing the option to pay a reduced penalty within the specified timeframe. The decision aimed to uphold legal principles while offering a reasonable opportunity for the appellants to mitigate the penalty amount by adhering to the prescribed conditions within the stipulated period.