2012 (4) TMI 533 - AT - Central Excise

Duty demand - Penalty u/s 11AC - Held that - amount of Rs. 13,69,790/- is already paid prior to the adjudication order and the amount is appropriated in the adjudication order. The provisions of Section 11AC of the Central Excise Act provide the equal amount of penalty in case the demand is confirmed by invoking the reasons of fraud or wilful mis-statement. The provisions of Section 11AC also provide that in case the duty determined along with interest is paid within 30 days of the date of communication of the order, an amount of penalty liable to be paid by such persons shall be 25% of the duty so determined. In the present case, as the amount of duty of Rs. 13,69,790/- is already paid, and appropriated by the adjudicating authority, therefore we find no infirmity in the impugned order whereby the Commissioner has imposed a penalty of 25% of the duty, which is already paid - Decided against Revenue.

Summary

Issues:
Challenge to penalty imposed under Section 11A of the Central Excise Act.

Analysis:
The case involves an appeal by the Revenue against an order passed by the Commissioner of Central Excise confirming a demand of Rs. 29,17,879 and imposing penalties under Section 11AC of the Central Excise Act. The Commissioner confirmed the demand and directed the recovery of the balance amount, along with interest and penalties. The Revenue specifically contested the quantum of penalty imposed under Section 11AC, arguing that it should be equal to the demand confirmed and that the adjudicating authority cannot impose a lesser penalty. The Revenue contended that the penalty should not be based on a percentage of the amount already deposited and appropriated.

Upon examination, the Tribunal noted that Rs. 13,69,790 had already been paid before the adjudication order and was appropriated accordingly. The provisions of Section 11AC mandate an equal penalty when the demand is confirmed due to fraud or wilful misstatement. Additionally, if the duty along with interest is paid within 30 days of the order, the penalty is set at 25% of the determined duty. In this case, since the duty amount had been paid and appropriated, the Tribunal found no fault in the Commissioner's decision to impose a penalty of 25% of the duty already paid. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the penalty decision made by the Commissioner of Central Excise.

This judgment clarifies the application of penalties under Section 11AC of the Central Excise Act, emphasizing that penalties should be commensurate with the circumstances and provisions of the Act. It highlights the importance of timely payment of duties and the impact it can have on penalty assessments. The decision underscores the authority of adjudicating bodies to determine penalties based on the specific facts and legal requirements of each case.