2013 (8) TMI 847 - AT - Central Excise

Penalty u/s 11AC - Held that - in case of confirmation of demand of duty on the allegations of suppression, etc, the authorities have no discretion to impose less penalty and the penalty is required to be enhanced to 100% of the duty confirmed - original adjudicating authority had imposed penalty of Rs.96,211/- on Unit No. II, which is almost 25% of the duty confirmed against the assessee - Decided in favour of Revenue.

Summary

Issues:
1. Confirmation of demand of duty against Unit No.2 of the respondent.
2. Imposition of penalty under Rule 25 read with Section 11 AC of the Act.
3. Challenge before the Commissioner (Appeals) regarding penalty imposition.
4. Applicability of penalty as per the law declared by the Hon'ble Supreme Court.
5. Penalty imposition on Unit No. II and Unit No. I.
6. Appeal by the Revenue against penalty imposition.

In the judgment delivered by Smt. Archana Wadhwa and Shri Rakesh Kumar, the case revolved around the confirmation of demand of duty against Unit No.2 of the respondent due to clandestine removal. The original adjudicating authority confirmed a duty demand of Rs.3,84,844, and subsequently imposed a penalty of Rs.96,211 on Unit No. II under Rule 25 read with Section 11 AC of the Act. The respondent, having accepted their liability and paid the duty promptly, appealed the penalty imposition before the Commissioner (Appeals), who set aside the penalty considering the duty payment before the show cause notice issuance. This led to the Revenue filing appeals challenging the Commissioner's decision.

Regarding the penalty imposition, the Hon'ble Supreme Court's ruling in the case of Dharmendra Textiles was cited, establishing that in cases of duty demand confirmation due to suppression, authorities are obligated to enhance the penalty to 100% of the confirmed duty. Despite this, the original adjudicating authority had imposed a penalty of Rs.96,211 on Unit No. II, which was approximately 25% of the duty confirmed. Notably, the Revenue did not appeal against this penalty imposition before the Commissioner (Appeals). Similarly, the penalty of Rs.5,000 on Unit No. I was also left unchallenged by the Revenue. Consequently, the judgment required the penalties as initially imposed to be upheld, leading to the allowance of the Revenue's appeals in line with the original penalty determinations.

In conclusion, the judgment highlighted the strict penalty imposition requirements in cases of duty demand confirmation, emphasizing the need for penalties to align with the duty amount confirmed. The decision underscored the significance of appealing penalty impositions to maintain consistency with legal precedents and regulatory provisions.