2015 (10) TMI 1239 - AT - Central Excise

Imposition of penalty u/s 11AC - Shortage of goods - Held that - So far as not extension of option of 25% reduced penalty under Section 11AC of the Central Excise Act, 1944 is concerned, it is observed from the O.I.O. Dated 21.05.2012 that no such option has been extended to the appellant by the adjudicating authority. In view of the settled proposition of law on this issue option of 25% reduced penalty is extended to the appellant under Section 11AC of the Central Excise Act, 1944, if the same is paid within 1 month from the receipt of this order. - Penalty of ₹ 25.000/- imposed upon the Director is reduced to ₹ 10,000.

Summary

Issues: Appeal against penalties imposed under Central Excise Act, 1944 - Extension of option of reduced penalty under Section 11AC - Imposition of penalty on the Director of the main appellant.

Analysis:
1. The appellant contested penalties imposed under O.I.A. No. 119 to 120/2012(Ahmd-I) CE/AK/Commr(A)/Ahd. The penalty of Rs. 84,290/- on M/s. Nitdip Textile Processors Pvt. Ltd. and Rs. 25,000/- on Shri Deepak C Shah under Rule 209A of the Central Excise Rules, 1944, was upheld in O.I.O Dated 21.05.2012. The appellant did not dispute duty and interest payment but argued that the option of 25% reduced penalty under Section 11AC was not extended, which is admissible. The appellant's representative contended that as the shortage of goods was reflected in statutory records, there was no intention to evade duty, and the penalty on the Director should not have been imposed as duty and interest were paid before the Show Cause Notice.

2. The Revenue argued that the penalty on the Director was correctly imposed and defended the first appellate authority's decision. Upon examination, it was found that the option of 25% reduced penalty under Section 11AC was not extended to the appellant by the adjudicating authority, contrary to settled law. The law mandates that this option is available if paid within one month from the receipt of the order. Regarding the penalty on the Director, it was noted that the Director had admitted to clearances without issuing Central Excise invoices or paying appropriate duty in a statement dated 05.09.1997. Consequently, the penalty of Rs. 25,000/- on the Director was reduced to Rs. 10,000, considering the circumstances of the case.

3. After hearing both sides and reviewing the case records, the Tribunal allowed the appeals to the extent indicated above. The decision highlighted the importance of adhering to legal provisions such as the option of reduced penalty under Section 11AC and ensuring penalties are proportionate to the circumstances of each case. The judgment emphasized the need for proper adherence to statutory requirements and the implications of admissions made by the parties involved in determining penalties under the Central Excise Act, 1944.