2014 (4) TMI 10 - AT - Central Excise

Quantum of penalty - Lower appellate authority has reduced the penalty imposed - Held that - Only ground taken by the lower appellate authority for reduction of penalty is that the company was registered with the BIFR and since duty along with interest have already been paid, he took a lenient view and reduced the penalty - respondent in the present case, initiated proceedings under SICA 1985 on malafide grounds with an intention to default legitimate recovery of excise duty and accordingly, the hon ble High dismissed the application of the respondent - company had not approached the BIFR for honest purpose, but sought to pursue the proceedings under SICA 1985 as a cover to stall the legitimate recovery of the due amount in Central Excise duty. In these circumstances, the ground taken by the lower appellate authority for reduction in penalty is clearly unsustainable - Decided in favour of Revenue.

Summary

Issues:
Reduction of penalty by lower appellate authority based on company registration with BIFR as a sick unit.

Analysis:
The Revenue appealed against the Order-in-Appeal reducing the penalty imposed on the appellant from Rs.10 lakhs to Rs.71/2 lakhs. The lower appellate authority cited the company's registration with the BIFR as a sick unit as the reason for the reduction. However, the Revenue argued that the reduction was unwarranted as the company had a history of defaulting in payment of duty. The Hon'ble High Court of Bombay had observed that the company's proceedings under SICA 1985 were malafide and intended to defy legitimate recovery of excise duty. Despite the company not appearing in response to the notice, the appellate tribunal found the lower authority's ground for reducing the penalty unsustainable. The tribunal set aside the lower appellate authority's order and restored the original penalty imposed by the adjudicating authority.

This judgment highlights the importance of considering the intent behind a company's actions, especially in cases involving default in payment of duty. The tribunal emphasized that registration with BIFR as a sick unit does not justify a reduction in penalty if the company's actions are found to be malafide and aimed at avoiding legitimate obligations. The decision serves as a reminder that penalties should be imposed based on the actual circumstances and intentions of the parties involved, rather than solely relying on external factors such as registration status.