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2012 (10) TMI 501 - HC - Central ExciseBenefit of the reduced penalty u/s 11AC - 30 days from the communication of the original order OR date of receipt of the order - Held that - As decided in CCE&C v. Harish Silk Mills 2010 (2) TMI 494 - GUJARAT HIGH COURT if duty amount with interest is not paid in time and even reduced penalty of 25% of duty amount is not paid in time and option is not given to respondent assessee, such option should be given to assessee and period of 30 days would commence from the date of giving such option. No illegality is committed by the Tribunal in giving option to the Assessee under the Proviso to section 11AC as the benefit of payment of reduced penalty can be availed by the assessee at the appellate stages also and it is not the import of the said provision that such benefit can be availed of only within 30 days from the communication of original order - in favour of assessee.
Issues:
- Interpretation of Proviso to section 11AC of the Central Excise Act, 1944 regarding reduced penalty payment timeline. - Applicability of the option to deposit dues and reduced penalty at the appellate stage. - Compliance with legal requirements in penalty imposition for excise duty evasion. Analysis: 1. The appeal raised a substantial question of law regarding the interpretation of the Proviso to section 11AC of the Central Excise Act, 1944. The key issue was whether the Tribunal erred in allowing the respondent to deposit duty, interest, and 25% of the penalty within 30 days from the Tribunal's order, instead of within 30 days from the communication of the original order as per the statutory provision. 2. The facts revealed that the respondent was involved in processing fabrics on a job work basis and was found to have cleared processed fabrics without paying excise duty. The adjudicating authority confirmed duty under the Act and imposed penalties. The Commissioner (Appeals) upheld the duty but reduced the penalty due to immediate duty payment. The Tribunal then granted the respondent the option to deposit dues and reduced penalty within 30 days. 3. The appellant contended that the lower authority should have allowed payment of duty within 30 days and reduced the penalty to 25% in line with the Proviso to section 11AC. The Tribunal's decision was based on legal precedents emphasizing the need to provide the option to pay reduced penalties, even at the appellate stage, with the 30-day timeline starting from the date of granting such option. 4. Legal provisions under section 11AC were examined, particularly the First Proviso which stipulates a reduced penalty if duty and interest are paid within 30 days from the communication of the order. The Tribunal's decision aligned with established case law requiring the option to pay reduced penalties within 30 days, even if not provided at the lower authority level. 5. The High Court referred to previous judgments confirming that the option to pay within 30 days under the Proviso to section 11AC should be granted either by the adjudicating authority or at the appellate stage. The Court affirmed that the benefit of reduced penalty could be availed at the appellate level, contrary to the appellant's argument that such benefit was restricted to the original order communication period. 6. Ultimately, the Court ruled in favor of the respondent, dismissing the appeal and affirming the Tribunal's decision to grant the option for reduced penalty payment within 30 days from the Tribunal's order. The judgment clarified the applicability of the Proviso to section 11AC and upheld the legality of the Tribunal's actions in this case.
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