2011 (2) TMI 861 - AT - Central Excise

Penalty under section 11AC - The investigation revealed that the appellants have used invoices of a fictitious firm to clear part of the goods manufactured by them - This fact stands admitted by the proprietor of the appellant firm - The same has been followed up by payment of substantial sum of Rs.48,239/- on 20.7.04. The statement has not been retracted - Therefore, confirmation of demand of duty and imposition of penalty under Section 11AC cannot be faulted.

Summary

Issues:
1. Confirmation of demand of duty based on the use of fictitious firm's invoices.
2. Imposition of penalty under Section 11AC of the Central Excise Act.
3. Applicability of the proviso to Section 11AC for payment of reduced penalty.
4. Consideration of the decision of the Hon'ble High Court of Delhi in similar cases.

Confirmation of demand of duty based on the use of fictitious firm's invoices:
The case involved the confirmation of a demand of duty against the appellants for using invoices of a fictitious firm to clear goods they had manufactured. The proprietor of the appellant firm admitted to this practice, which was further supported by a substantial payment made by the appellants. The Tribunal upheld the confirmation of the duty demand, considering the unchallenged statement and payment made by the appellants as evidence.

Imposition of penalty under Section 11AC of the Central Excise Act:
In addition to confirming the duty demand, a penalty was imposed on the appellants under Section 11AC of the Central Excise Act. The penalty was imposed by the original authority and upheld by the Commissioner (Appeals). The Tribunal found the imposition of the penalty justified, given the use of fictitious invoices and the admission of the appellant's proprietor. The penalty was deemed appropriate in this context.

Applicability of the proviso to Section 11AC for payment of reduced penalty:
The appellant's advocate argued that the authorities had not provided the option to pay a reduced penalty of 25% of the duty involved, as allowed under the proviso to Section 11AC. Citing a decision of the Hon'ble High Court of Delhi, the advocate requested the Tribunal to extend this option to the appellants. The Tribunal accepted this argument and granted the appellants the option to pay a reduced penalty of Rs.16,890.25 within 30 days, failing which the penalty amount would revert to Rs.67,561.

Consideration of the decision of the Hon'ble High Court of Delhi in similar cases:
The Tribunal considered a decision of the Hon'ble High Court of Delhi in a similar case cited by the appellant's advocate. This decision influenced the Tribunal's decision to grant the appellants the option to pay a reduced penalty in line with the proviso to Section 11AC. The Tribunal's decision was based on the precedent set by the High Court, ensuring fairness and consistency in penalty imposition.

In conclusion, the appeal was partially allowed, confirming the duty demand and upholding the penalty under Section 11AC. However, the appellants were granted the option to pay a reduced penalty amount within a specified timeframe, aligning with the proviso to Section 11AC and the decision of the Hon'ble High Court of Delhi in similar cases.