2013 (10) TMI 352 - AT - Central Excise

Reduced Penalty u/s 11AC of the CE Act - Whether the benefit of payment of 25% penalty u/s 11AC of the Central Excise Act was not admissible to the Respondent as it was not paid by the Respondent within 30 days of the order but was paid earlier and that can only be considered as a deposit made Held that - It has to be seen as to what could be the motive of the Respondent for denying the receipt of OIO on 06.4.2006 - The entire duty amount was paid by the Respondent on 06.8.2003 and a further amount was paid on 21.08.2003 and 29.08.2003, which represented 25% of the amount of duty involved Relying upon Commissioner of Central Excise & Cus., Surat vs. Suncity Synthetics 2010 (2) TMI 829 - GUJARAT HIGH COURT - All these payments were made much before the show cause notice was issued on 30.09.2004 - As the amounts involved in the proceedings were already paid by the Respondent then it was not to gain in any way by posing if it has not to have received OIO in time the view taken by Commissioner (Appeals) is correct and upheld. It will be a very narrow view to hold that payment of 25% reduced penalty, if made within 30 days of the communication of OIO, will only be proper but if the same payment is made before the issue of show cause notice or Order in Original the same will not be proper and that in the latter situation, Respondent will be required to pay 100% of the penalty imposed under Section 11AC of the Central Excise Act, 1944 - penalty in excess of 25% of the penalty, already paid by the Respondent before the issue of show cause notice, is not payable under Section 11AC of the Central Excise Act, 1944 - Decided against Revenue.

Summary

Issues Involved:
1. Timeliness of the appeal filed before Commissioner (Appeals).
2. Validity of the authorization by the Committee of Commissioners.
3. Admissibility of the benefit of 25% reduced penalty under Section 11AC of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Timeliness of the Appeal Filed Before Commissioner (Appeals):
The primary issue was whether the appeal filed by the Respondent before the Commissioner (Appeals) was time-barred. The original order (OIO) dated 20.03.2006 was served on the Respondent on 06.04.2006. The Respondent claimed the order was misplaced by an employee and only discovered on 03.10.2006. The Commissioner (Appeals) accepted the Respondent's affidavits and held that the appeal was filed within the stipulated period, considering the receipt date as 03.10.2006. This decision was challenged by the Revenue, asserting that the appeal was time-barred as the OIO was received by the Respondent's employee on 06.04.2006. The Tribunal upheld the Commissioner (Appeals)'s decision, noting that the Respondent had no motive to delay the appeal since the duty amount had already been paid before the show cause notice was issued.

2. Validity of the Authorization by the Committee of Commissioners:
The Respondent raised preliminary objections regarding the validity of the authorization given by the Committee of Commissioners, arguing that the authorization was signed on different dates and lacked reasons for filing the appeal. The Tribunal examined conflicting judicial precedents on procedural defects in authorizations. It concluded that procedural defects, such as different signing dates, are curable if the grounds of appeal provide detailed reasons. The Tribunal rejected the preliminary objections, citing case laws that supported the view that such procedural irregularities should not obstruct justice.

3. Admissibility of the Benefit of 25% Reduced Penalty Under Section 11AC:
The Respondent had paid 25% of the penalty before the show cause notice was issued, but the Revenue argued that this payment could not be considered as the reduced penalty under Section 11AC, which requires payment within 30 days of the order. The Tribunal referred to the Gujarat High Court's judgment in the case of Commissioner of Central Excise & Cus., Surat vs. Suncity Synthetics, which allowed the appellate authority to grant the benefit of reduced penalty even if the payment was made before the show cause notice. The Tribunal held that it would be unreasonable to deny the benefit of reduced penalty when the payment was made before the issuance of the show cause notice. Thus, the Respondent was not liable to pay the penalty in excess of 25% already paid.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s decision on both the timeliness of the appeal and the admissibility of the reduced penalty. The Tribunal emphasized the importance of substantial justice over procedural technicalities, ensuring that the Respondent was not unduly penalized due to procedural lapses.