2012 (7) TMI 83 - AT - Central Excise

Penalty u/s 11AC - reduction of penalty at appellate stage - Revenue contesting the same on ground that such option can be given only at the adjudication stage - Held that - Where the original adjudicating authority did not extend such option in writing, option can be given at the appellate stage. See Akash Fashion Prints Pvt. Limited (2009 (1) TMI 113 (HC)) - Decided against the Revenue.

Summary

Issues: Reduction of penalty on the 1st appellant, imposition of penalty on the 2nd and 3rd appellants, applicability of Section 11AC for penalty, and the fairness of penalties imposed.

Reduction of Penalty on 1st Appellant:
The judgment revolves around a case where a shortage of textured yarn was noticed during a surprise visit to a factory premises, leading to the admission by the director that goods were sold without invoices and without payment of duty. The penalty imposed on the 1st appellant was reduced to 25% on the condition of discharging the duty liability with interest and penalty within 30 days. The Revenue appealed against this decision, arguing against the reduction of penalty. However, the Tribunal rejected the appeal, citing precedents where the option to pay duty, interest, and penalty at the appellate stage was deemed acceptable when not extended in writing by the original adjudicating authority.

Imposition of Penalty on 2nd and 3rd Appellants:
The Director of the Company and a yarn broker admitted to selling and purchasing yarn without invoices and without payment of duty. The Revenue contended that both appellants knowingly committed an offense and deserved penalties. The Commissioner (Appeals) had reduced the penalties on the 2nd and 3rd appellants, prompting the Revenue to appeal for the imposition of maximum penalties. However, the Tribunal found the penalties imposed by the Commissioner (Appeals) to be fair considering the total amount of duty evaded and the penalty on the 1st appellant.

Applicability of Section 11AC for Penalty:
The Revenue appealed on the grounds that the Commissioner should not have given the option to pay duty, interest, and 25% of the duty towards penalty under Section 11AC at the appellate stage. The Tribunal rejected this appeal, citing previous judgments that supported the option to be given at the appellate stage when not extended in writing by the original adjudicating authority.

Fairness of Penalties Imposed:
The Tribunal upheld the penalties of Rs.25,000/- and Rs.15,000/- on the 2nd and 3rd appellants, respectively, as adjudged by the Commissioner (Appeals), deeming them fair and not requiring any interference. The appeals filed by the Revenue were ultimately rejected, affirming the penalties imposed on the 2nd and 3rd appellants as just and appropriate based on the circumstances of the case.