2013 (11) TMI 952 - AT - Central Excise

Option of 25% reduced Penalty u/s 11AC of Central Excise Act 1944 Held that - There has been a clandestine activity on the part of the appellant by processing and clearing of fabrics without recording the same in statutory records and without payment of duty - It is a case of fraud and suppression with intention to evade Central Excise duty - There is no provision in Central Excise law that show cause notice is required to be issued within one year from the date of visit of the Central Excise officers. The appellant contended that once the entire duty liability was paid prior to issue of show cause notice, then there was no question of imposing penalty under Section 11AC of Central Excise Act, 1944 - No specific provision has been quoted by the appellant in grounds of appeal but it is apparent that he is referring to Clause (2A) and (2B) of the Section 11A(2) of Central Excise Act, 1944. It was a case of fraud and suppression with intention to evade Central Excise duty, therefore the correct provision applicable will be Section 11A(1A) of Central Excise Act, 1944, where appellant was also required to pay 25% penalty imposable under Section 11AC of Central Excise Act, 1944 along with interest applicable under Section 11AB of Central Excise Act, 1944 - the adjudicating authority also gave them an option to pay reduced penalty of 25% under Section 11AC of Central Excise Act, 1944 if the payments are made within one month from the date of receipt of Order in Original - no such option was exercised by the appellant Decided against Assessee.

Summary

Issues:
1. Alleged clandestine manufacture and clearance of man-made fabrics without payment of Central Excise duty.
2. Time limitation for issuing show cause notice.
3. Imposition of penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
1. The case involved allegations of clandestine manufacture and clearance of man-made fabrics without paying Central Excise duty. Statements by the partner of the appellant admitted to the illicit activities. The appellant argued that the show cause notice should have been issued within one year of the visit by Central Excise officers. However, the Tribunal observed that the demand was not time-barred as there is no specific provision requiring issuance of a notice within one year from the date of visit. The appellant's argument on this issue was rejected.

2. The appellant contended that since the entire duty liability was paid prior to the show cause notice, there should be no penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal noted that the case involved fraud and suppression to evade duty, making Section 11A(1A) applicable. The appellant was required to pay a 25% penalty under Section 11AC along with interest under Section 11AB. The adjudicating authority had offered the option of a reduced penalty if paid within a specified time, which the appellant did not exercise. Thus, the imposition of penalty was justified under the circumstances.

3. After considering the arguments from both sides and examining the case records, the Tribunal found that the appellant had no merit or grounds for challenging the duty liability or the time limitation for issuing the show cause notice. Consequently, the appeal filed by the appellant was rejected, upholding the decision of the adjudicating authority regarding the duty liability, penalty, and interest.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the Tribunal's reasoning leading to the decision to reject the appellant's appeal.