2012 (11) TMI 1005 - AT - Central Excise

Clandestine removal of cement - Duty demand - Equivalent penalty - Commissioner reduced the penalty amount by taking note of the fact that this amount of excise duty had been deposited by the appellant even before the issue of show cause notice - Held that - Bare reading of the Section 11AC indicate that in the cases in which the excise duty has been paid or short paid by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11A, shall also be liable to pay a penalty equal to the duty so determined. Admittedly, the duty demand on the ground of clandestine removal has been confirmed against the respondent and the appeal against aforesaid confirmation has been dismissed by CESTAT. Therefore, in view of the above provisions, the respondent is liable to pay the penalty equal to the amount of duty confirmed against them. Coming to the proviso 1st & 2nd, on reading of the aforesaid provisos, it is apparent that benefit of reduction of penalty to 25% can be availed by the assessee provided he deposits the duty demand confirmed against him along with interest and 25% of the duty as penalty within 30 days of communication of the order confirming the demand. In the instant case, the respondent himself admits that the duty demand has been confirmed against them and he has not pleaded deposit of the duty within 30 days of the order of the confirmation of duty demand either by the adjudicating authority or by the Commissioner (Appeals) or by CESTAT - Commissioner (Appeals) committed a grave error in reducing the penalty ignoring the provisions of Section 11AC of the Central Excise Act, 1944 - Decided in favour of Revenue.

Summary

Issues:
Clandestine removal of cement, duty demand confirmation, reduction of penalty amount by Commissioner (Appeals), interpretation of Section 11AC of the Central Excise Act, 1944.

Analysis:
The case involves a manufacturer of cement accused of clandestine removal, resulting in a duty demand of Rs. 3,17,089. The jurisdictional Asstt. Commissioner confirmed the duty demand and imposed a penalty equal to the amount. The Commissioner (Appeals) upheld the duty demand but reduced the penalty considering the duty deposit before the show cause notice. The Revenue appealed this reduction, leading to the current case.

The key contention revolved around the interpretation of Section 11AC of the Central Excise Act, 1944. The Revenue argued that the penalty reduction was unjustified, citing precedents like the Dharamendra Textile Processors case and the Rajasthan Spinning & Weaving Mills case. On the other hand, the respondent's advocate referred to the provisos of Section 11AC and relevant court judgments to support the penalty reduction.

The Tribunal analyzed the facts and legal provisions. It noted that the respondent did not deposit the duty within 30 days of the order confirmation, a crucial requirement for availing the penalty reduction under Section 11AC. As a result, the Tribunal found the penalty reduction erroneous and ordered the respondent to pay the increased penalty of Rs. 3,17,089 as initially imposed by the order-in-original.

In conclusion, the Tribunal emphasized the strict application of Section 11AC, highlighting the importance of timely duty payment for penalty reduction. The judgment underscores the significance of complying with statutory provisions and the consequences of failing to meet the specified requirements under the Central Excise Act, 1944.