2011 (7) TMI 856 - AT - Central Excise

Penalty - Option to pay 25% of the duty - Plain reading of the first proviso would reveal that the same is attracted only in cases where the duty amount along with interest determined by the assessing authority is paid within a period of 30 days from the date of communication of the order determining such duty along with 25% of the duty as penalty - Held that as the facts of the case clearly disclose that the appellants had not paid the entire duty even within the period of 30 days after determination - Decided against the assessee

Summary

Issues:
1. Interpretation of the first proviso to Section 11AC regarding payment of penalty.
2. Obligation of assessing authority to make a specific offer for payment of penalty.
3. Applicability of High Court decisions in similar cases.
4. Compliance with conditions for availing benefit under the proviso.

Analysis:

1. The primary issue in this judgment revolves around the interpretation of the first proviso to Section 11AC, which allows for a reduced penalty of 25% if the duty amount along with interest is paid within 30 days of the order communicating the duty liability. The benefit under this proviso is limited to the penalty amount, providing a waiver of 75% of the penalty if all requirements are met.

2. The assessing authority is not obligated to specifically offer the option to pay 25% penalty under the proviso. The judgment clarifies that the duty liability, interest, and penalty amounts are clearly communicated by the assessing authority, leaving no room for confusion regarding the quantification of payments required from the assessee.

3. High Court decisions cited in similar cases, such as K.P. Pouches (P) Ltd. and J.R. Fabrics (P) Ltd., emphasize the statutory nature of the benefit under the proviso. These decisions highlight that compliance with the conditions set forth in the proviso is essential for availing the penalty reduction, rather than an obligation on the part of the adjudicating authority to make a specific offer.

4. The judgment concludes that the appellants in this case failed to pay the entire duty amount within the specified 30-day period after determination, thereby not meeting the basic condition for benefiting from the proviso. Consequently, the application for relief is dismissed as the appellants did not fulfill the necessary requirements for availing the penalty reduction as per the statutory provision.

This analysis clarifies the key legal aspects and interpretations made in the judgment by considering the relevant provisions of Section 11AC and the precedents cited in similar cases to determine the outcome of the application.