2013 (5) TMI 738 - AT - Central Excise

Clearance of waste and scrap without payment of duty - duty demand along with interest and penalty under Section 11AC - assessee submits that they have paid 25% of the penalty thus this payment may be considered as sufficient for final settlement - Held that - Considering the fact that appellant is a small manufacturer and this has happened during the early stages of his operations and consedring the case of K. P. POUCHES (P) LTD. 2008 (1) TMI 296 - HIGH COURT OF DELHI & Bhagyoday Silk Industries (2010 (2) TMI 971 - GUJARAT HIGH COURT) to the effect that matter can be settled on payment of 25% of penalty - as 25% of the duty demand which amount has already been paid thus matter closed.

Issues:
1. Duty payment on waste and scrap generated during the manufacturing process.
2. Imposition of penalty under Section 11AC of the Central Excise Act.
3. Appeal against the order of Commissioner (Appeals) regarding duty demand, interest, and penalty.

Issue 1: Duty payment on waste and scrap generated during the manufacturing process
The appellant, a manufacturer of excisable goods, generated waste and scrap of iron and steel during the manufacturing process. They cleared this waste and scrap without paying duty, which was later pointed out during an audit by excise officers. The appellant then paid the duty amount along with interest, but no penalty was paid initially. Subsequently, a Show Cause Notice (SCN) was issued by the Revenue demanding duty, interest, and imposing a penalty under Section 11AC of the Central Excise Act. The Commissioner (Appeals) upheld the duty demand and penalty. The appellant argued that the payment made should be considered sufficient for final settlement, citing precedents from different High Courts. The Tribunal, considering the appellant's circumstances as a small manufacturer and the legal precedents, reduced the penalty to 25% of the duty demand already paid, closing the matter in favor of the appellant.

Issue 2: Imposition of penalty under Section 11AC of the Central Excise Act
The Revenue imposed a penalty under Section 11AC of the Central Excise Act on the appellant for clearing waste and scrap without paying duty. The appellant, after paying the duty and interest, argued that the penalty should be considered settled based on precedents from different High Courts allowing for payment of 25% of the penalty amount within a specified time frame. The Revenue opposed this argument, stating that the concession regarding penalty payment is available under Section 11AC, and the penalty should have been paid at the time of paying duty and interest. The Tribunal, after considering both sides, decided to reduce the penalty to 25% of the duty demand already paid, taking into account the appellant's circumstances as a small manufacturer and the legal precedents cited.

Issue 3: Appeal against the order of Commissioner (Appeals) regarding duty demand, interest, and penalty
The appellant filed an appeal before the Tribunal against the order of the Commissioner (Appeals) confirming the duty demand, interest, and penalty imposed by the Revenue. The appellant argued that the payment already made should be considered sufficient for final settlement based on legal precedents allowing for payment of 25% of the penalty amount within a specified time frame. The Tribunal, acknowledging the appellant's situation as a small manufacturer and the legal precedents cited, decided to reduce the penalty to 25% of the duty demand already paid, thereby allowing the appeal in favor of the appellant.

This detailed analysis of the judgment addresses the issues involved, the arguments presented by both parties, and the Tribunal's decision in each aspect of the case.

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