2012 (8) TMI 249 - AT - Central Excise

Duty demand on allegation of clandestine removal - Held that - As the duty liability has been discharged after the issuance of show cause notice the benefits which are available to an assessee prior to issuance of show cause notice should also be extended after the issuance of show cause notice, if liability is discharged before the adjudication order. No merits in the grounds raised by the Revenue that assessee may seek refund of the amount as that the entire order in original is set-aside as the first appellate authority has considered the extension of benefits of Section 11A to the assessee only on the ground that he has paid the amount in full.

Summary

Issues:
- Interpretation of Section 11A of the Central Excise Act, 1944 regarding duty liability discharge and proceedings conclusion.

Analysis:
The appeal was filed by the Revenue against an order in appeal where the respondent assessee was charged with clandestine removal and duty demand, along with penalties. The main respondent discharged the entire duty liability, interest, and 25% of the penalty amount, claiming benefits under Section 11A (1A) and proviso of sub Section 2 of Section 11A. The adjudicating authority disagreed with the assessee's contentions, but the first appellate authority accepted them, dropping proceedings against the other two assessees and the balance penalty recovery. The Revenue argued that Section 11A does not require adjudication proceedings and allows the assessee to file a refund claim. However, the Tribunal, considering the provisions of Section 11A, held that if the assessee discharges the duty liability along with interest and 25% of the penalty, proceedings come to an end without the need for a show cause notice. The Tribunal noted that benefits should be available even after the issuance of a show cause notice if the liability is discharged before the adjudication order. The Tribunal referred to a Division Bench decision and rejected the Revenue's grounds, upholding the first appellate authority's decision to extend benefits to the assessee for full payment.

The Tribunal found the impugned order to be correct and legal, citing a Division Bench decision that covered the issue. The Tribunal concluded that the benefits of Section 11A should be extended to the assessee for discharging the full liability, and the Revenue's argument for a refund claim was dismissed. The Tribunal upheld the first appellate authority's decision and rejected the appeal, stating that the issue was covered by the previous Division Bench decision.