2011 (9) TMI 649 - AT - Central Excise

Benefit of Reduced Penalty @ 25% Duty - Held - In view of CCE Ahmedabad Vs Akash Fashion Prints Pvt. Ltd (2009 - TMI - 33022 - GUJARAT HIGH COURT) - if the duty liability and interest thereof is paid or is admitted by the assessee the benefit of payment of 25% of duty liability as penalty under Section 11AC can be extended to the assessee provided he pays the same within 30 days of the order. - case decided in favor of assessee.

Summary

Issues:
Violation of Central Excise rules, Confirmation of demand of duty and interest, Re-quantification of duty liability, Payment of penalty under Section 11AC of Central Excise Act.

Analysis:
The appeal was filed against the Order-in-Appeal confirming the demand raised by the adjudicating authority due to violations found during checks at the factory premises. The appellant had removed finished goods clandestinely and there was a shortage of finished goods and inputs on which CENVAT Credit was availed. The Commissioner (Appeals) concurred with the adjudicating authority but allowed re-quantification of duty liability based on cum-duty price. The appellant accepted the re-quantified duty liability but sought the benefit of paying penalty at 25% of the duty amount. The adjudicating authority confirmed the duty demand and interest, which the appellant did not challenge. The Tribunal noted that the appellant did not contest the impugned order on merit or limitation. The adjudicating authority had confirmed a duty demand of Rs. 9,52,892 and interest of Rs. 21,432. The appellant had already deposited Rs. 10,41,153, which was appropriated by the authority. The Tribunal referred to a High Court decision allowing the benefit of paying 25% of duty liability as penalty if admitted by the assessee within 30 days. Therefore, the appeal was rejected, with the modification that the appellant must deposit 25% penalty within 30 days as per the settled law by the High Court.

This judgment addressed the issues of confirming duty demand and interest, re-quantification of duty liability, and payment of penalty under Section 11AC of the Central Excise Act. The appellant had accepted the re-quantified duty liability but sought the benefit of paying penalty at 25% of the duty amount. The Tribunal referred to a High Court decision allowing this benefit if the duty liability and interest were paid or admitted by the assessee within 30 days. The Tribunal found no reason not to extend this benefit to the appellant. Therefore, the appeal was rejected, with the condition that the appellant must deposit 25% penalty within 30 days. This judgment provides clarity on the payment of penalty under Section 11AC and the benefit available to the assessee if duty liability and interest are paid or admitted within the specified time frame.