2011 (4) TMI 1107 - AT - Central Excise

Penalty equal to duty Held that - original adjudicating authority while imposing penalty equal to duty, did not indicate the relevant provisions of the statute which provided that if the payment is made within 30 days from the date of order the penalty stands reduced to 25%.Since this option has not been given by both the lower authorities, we consider it appropriate that such an opportunity should be given to the respondent, if the respondent deposits the interest, and the penalty to the extent of 25% of the duty, within 30 days from the date of receipt of this order, penalty shall stand reduced to 25% of duty

Summary

Issues:
1. Liability to penalty under Section 11AC when suppression of facts is established.
2. Reduction of penalty to 25% of duty if payment made within 30 days.

Detailed Analysis:

Issue 1: The case involved the respondent availing the benefit of small-scale industries exemption Notification but exceeding the exemption limit without declaring the value, obtaining registration, or paying duty. The learned Commissioner (Appeals) had reduced the penalty to Rs. 20,000 considering the duty payment before the show-cause notice. The Revenue appealed against this decision. The Tribunal found that the liability to penalty under Section 11AC is mandatory when suppression of facts is established. The respondent had not intimated the department about exceeding the exemption limit, registration, or duty payment, attributing it to a clerk's mistake. Both lower authorities concluded that the proprietor did not take sufficient care, and suppression of facts was established. Citing the decision of the Hon'ble Supreme Court in a relevant case, the Tribunal allowed the Revenue's appeal on the grounds raised.

Issue 2: The Tribunal noted that the original adjudicating authority did not mention the provision allowing for a reduction of penalty to 25% of duty if payment is made within 30 days. Referring to a decision of the Hon'ble Delhi High Court, the Tribunal decided to provide the respondent with an opportunity to avail of this provision. The Tribunal directed that if the respondent deposits the interest and 25% of the penalty within 30 days from the date of receipt of the order, the penalty would stand reduced to 25% of the duty. However, failure to make the payment within the stipulated time would result in the penalty liability being equal to the duty amount demanded. The Tribunal pronounced the operative part of the order in court, clarifying the consequences of timely payment and non-payment of interest and penalty within the specified period.