2014 (2) TMI 355 - HC - Central Excise

Penalty u/s 11AC - Whether the CESTAT committed error in interpreting proviso of Section 11AC of the Central Excise Act, 1944 by offering to an assessee to deposit amount of interest and penalty within 30 days of its order to avail benefit of reduced penalty at 25% of duty, though CESTAT has not redetermined the quantum of duty - Held that - Section 11AC of the Act provides for levy of penalty in case of short levy or non-levy of duty in certain cases. The first proviso thereunder provides for exception to the main provision by stipulating that where the duty and the interest are paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid under Section 11AC of the Act shall be 25% of the duty so determined; and under second proviso, it is provided that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within a period of thirty days referred to in the first proviso - Following decision of Commissioner of Customs & Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited 2009 (1) TMI 113 - GUJARAT HIGH COURT - Decided against Revenue.

Summary

Issues:
Interpretation of proviso of Section 11AC of the Central Excise Act, 1944 by the CESTAT in offering an assessee to deposit amount of interest and penalty within 30 days to avail reduced penalty at 25% of duty.

Analysis:
1. The Revenue raised a question on whether the CESTAT erred in interpreting the proviso of Section 11AC of the Central Excise Act by allowing an assessee to deposit interest and penalty within 30 days of its order to benefit from a reduced penalty without redetermining the duty amount.

2. Upon review of documents and material, it was found that the respondent, engaged in the manufacture of PVC film, contravened the Central Excise Act, 1944.

3. A show cause notice was issued demanding central excise duty with interest for goods cleared from June 1999 to March 2000, along with proposing a penalty under Section 11AC of the Act.

4. The adjudicating authorities confirmed the duty demand with interest and penalty. The Tribunal allowed the option to pay duty, interest, and penalty within 30 days, reducing the penalty to 25% based on its decision in a previous case.

5. The Tribunal's decision was in line with the High Court's view in previous cases, confirming that an option to pay duty, interest, and penalty within 30 days, with the penalty reduced to 25%, should be provided if there is no error in the Tribunal's order.

6. The High Court dismissed the appeal, stating that no legal question arose for determination as there was no error found in the Tribunal's decision, thereby upholding the Tribunal's interpretation of the proviso of Section 11AC of the Central Excise Act.

This comprehensive analysis covers the interpretation of the legal provisions, the factual background, the Tribunal's decision, and the High Court's final judgment, providing a detailed understanding of the issues involved in the case.