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2011 (2) TMI 1063 - AT - Central ExciseWaiver of pre-deposit - stay petition - appellant had deposited the entire amount of duty and interest before issuance of show-cause notice - Held that - The impugned order which upheld the payment of equivalent amount of penalty u/s 11AC is erroneous; at the same time, the benefit of provisions of Section 11AC of the Central Excise Act, 1944 extented and direct the assessee to pay 25% of the amount of duty as penalty within 30 days of the receipt of this order, failing which the appellants will be required to pay the entire amount duty as penalty.
Issues: Stay petition for waiver of pre-deposit of penalty, interpretation of Section 11AC of Central Excise Act, 1944
In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue at hand was a stay petition seeking a waiver of pre-deposit of 25% of the penalty amount. The Tribunal noted that the appeal could be resolved promptly as the matter was narrow in scope. The appellant did not contest the demand and interest but disputed the penalty imposed under Section 11AC of the Central Excise Act, 1944. The adjudicating authority had failed to specify the requirement to deposit 25% of the penalty amount within 30 days as per the mentioned section. Citing precedents like the judgments of the Hon'ble High Court of Delhi in certain cases, the Tribunal concluded that if duty liability and interest were paid before the show-cause notice, the reduced penalty provision of 25% of the duty amount could be applicable to the assessee. The Tribunal found the impugned order upholding the penalty of Rs. 19,30,723 under Section 11AC to be erroneous. However, it extended the benefit of Section 11AC to the appellant and directed them to pay 25% of the duty amount as penalty within 30 days of receiving the order. Failure to comply would result in the appellants having to pay the entire duty amount as a penalty. The stay petition and appeal were disposed of with this modification to the impugned order. The judgment clarified the application of Section 11AC in the context of pre-deposit of penalties under the Central Excise Act, 1944, providing guidance for future cases involving similar issues.
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