2013 (5) TMI 600 - AT - Central Excise

Penalty - Revenue s prayer is for enhancement of the penalty amount to the extent of 100% of the duty amount.Held that - Appellant had deposited the entire duty alongwith penalty of Rs. 15,000/-. In terms of the proviso to Section 11AC, if an assessee deposit the entire dues alongwith 25% penalty within 30 days of the passing of the order the penalty is required to be reduced to 25%. Thus, if the appellant have deposited the entire dues including 25% of the penalty, the penalty shall stand restricted to 25% of Rs. 50,145/-. The revenue s appeal is dismissed.

Summary

Issues:
1. Reduction of penalty by Commissioner (Appeals) due to pre-payment of duty.
2. Revenue's appeal for enhancement of penalty amount.
3. Interpretation of penalty provisions under Section 11AC in light of Supreme Court decision.
4. Application of proviso to Section 11AC regarding reduction of penalty.
5. Disposal of revenue's appeal by Appellate Tribunal.

Issue 1: Reduction of penalty by Commissioner (Appeals) due to pre-payment of duty

The Appellate Tribunal addressed the issue of the Commissioner (Appeals) reducing the penalty while confirming the duty payment made by the appellant before the issuance of the show cause notice. The Tribunal noted the reduction but proceeded to analyze the Revenue's appeal for enhancing the penalty amount.

Issue 2: Revenue's appeal for enhancement of penalty amount

The Revenue sought an increase in the penalty amount, arguing for a 100% penalty of the duty confirmed. The Tribunal referred to a Supreme Court decision in the case of Union of India vs. Dharmendra Textile Processors, which established that the penalty under Section 11AC should be 100% of the duty confirmed without discretion to reduce it. The Tribunal, considering the appellant's acceptance of duty liability and the Supreme Court ruling, enhanced the penalty to match the duty amount of Rs. 50,145.

Issue 3: Interpretation of penalty provisions under Section 11AC in light of Supreme Court decision

The Appellate Tribunal relied on the Supreme Court decision to determine the penalty amount, emphasizing that the penalty under Section 11AC should be equal to 100% of the duty confirmed. The Tribunal highlighted that this provision does not allow for discretionary reduction by authorities, leading to the decision to enhance the penalty to match the duty amount.

Issue 4: Application of proviso to Section 11AC regarding reduction of penalty

The Tribunal considered the proviso to Section 11AC, which allows for a reduction in penalty to 25% if the assessee pays the entire dues along with 25% penalty within 30 days of the order. Noting that the original adjudicating authority did not provide this option, the Appellate Tribunal decided to extend this benefit to the appellant. As the penalty already paid was more than 25% of the duty amount, the Tribunal restricted the penalty to 25% of Rs. 50,145, providing relief to the appellant.

Issue 5: Disposal of revenue's appeal by Appellate Tribunal

In conclusion, the Appellate Tribunal disposed of the revenue's appeal by enhancing the penalty to match the duty amount but also applying the proviso to Section 11AC to restrict the penalty to 25% of the duty confirmed. This decision balanced the legal requirements with considerations of fairness and the appellant's actions, ensuring a just resolution to the matter.