2014 (10) TMI 193 - AT - Central Excise

Penalty under Section 11AC(1)(a) - Held that - appellant is neither disputing the duty amount or interest or 25% of penalty. We have examined the provisions of Section 11AC (c) which are to the effect that where duty determined under sub-Section (10) of Section 11A and the interest payable under Section 11AA is paid within 30 days of the date of communication of the order of the Central Excise officer, the amount of penalty liable to be paid by such person shall be 25% of the duty so determined. As such, the said provision provides lowering of the penalty to 25% in the cases the entire deposits are made within 30 days. Admittedly, the said deposits stand made by the appellant within a period of 30 days of passing of the order in which case the penalty shall stand reduced to 25%. Accordingly, we hold that the appellant are not required to pay the balance 75% of the penalty - Decided in favour of assessee.

Issues:
1. Failure to pay 75% balance penalty after depositing duty, interest, and 25% penalty.
2. Delay in filing appeal due to misunderstanding regarding penalty payment requirements.
3. Condonation of delay in filing appeal.
4. Waiver of pre-deposit of 75% penalty.
5. Interpretation of Section 11AC (c) regarding penalty reduction to 25%.
6. Decision on appeal due to non-dispute of duty, interest, and 25% penalty.

Analysis:

1. The appellant failed to pay the 75% balance penalty after depositing the duty, interest, and 25% penalty as required by the Additional Commissioner. The Revenue later requested the balance penalty payment, leading to a delay of 134 days in filing the appeal against the order of the lower authorities.

2. The appellant contended that they believed the matter was finalized after depositing the entire duty, interest, and 25% penalty. They only considered filing an appeal when approached by the Revenue for the balance penalty amount. The appellant sought condonation of the delay in filing the appeal based on this genuine misunderstanding.

3. The Tribunal agreed with the appellant's contention, stating that if the duty, interest, and 25% penalty were deposited within 30 days of the original order, the penalty should have been reduced to 25% as per Section 11AC (c). The Tribunal considered the appellant's belief in not filing an appeal as a valid reason and thus condoned the delay, allowing the COD application.

4. Despite the appellant's failure to pay the 75% balance penalty, the Tribunal waived the pre-deposit requirement for this amount. The Tribunal opined that there was no necessity to impose such a penalty considering the circumstances of the case.

5. The Tribunal examined the provisions of Section 11AC (c), which stipulate that if duty and interest are paid within 30 days, the penalty should be reduced to 25%. Since the appellant had made the required deposits within the specified timeframe, the penalty was deemed to be appropriately reduced to 25%, and the appellant was not obligated to pay the remaining 75% penalty amount.

6. As the appellant did not dispute the duty amount, interest, or the 25% penalty, the Tribunal proceeded to decide on the appeal. Given the appellant's compliance with the deposit requirements within the stipulated time frame, the Tribunal concluded that the appellant was not liable to pay the balance 75% penalty amount.

This judgment highlights the importance of understanding penalty payment requirements and the implications of timely depositing duty, interest, and penalties as per statutory provisions to avoid unnecessary financial obligations.

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