2015 (10) TMI 1309 - AT - Central Excise

Penalty u/s 11AC - Denial of CENVAT Credit - clearance of samples without payment of duty - Held that - Appellant has paid a sum of ₹ 10 lakhs towards the demand on duty of ₹ 7,10,821/- before issuance of the show cause notice. In these circumstances, the benefit of provision under Section 11AC of the Act was required to be given to the appellant which both the lower authorities have failed to do so. In these circumstances, I reduce penalty on the main appellant to 25% of the duty confirmed which the appellant shall pay after adjusting the amount already paid within 30 days of the receipt of this order failing which the appellant shall be required to pay 100% duty as penalty. - As the main appellant has paid the entire amount of duty, interest and 25% duty as penalty before issuance of the show cause notice, the proceedings against all the noticees comes to an end, therefore, penalty on Shri Praveen Chadha is set aside. - Appeal disposed of.

Summary

Issues:
Appeal against penalty imposition.

Analysis:
The case involved an appeal against an order imposing penalties on the appellants. The facts revealed a shortage of inputs at the appellant's premises, unauthorized Cenvat credit availed, clearance of samples without duty payment, and subsequent demand notices issued. The appellants contested the penalties imposed, stating they had paid the duty, interest, and a portion of the penalty before the show cause notice. The appellant argued for a reduction in penalty to 25% of the duty under Section 11AC of the Central Excise Act. The appellant also challenged the imposition of penalties under Rule 26, as the goods were not held liable for confiscation. The appellate authority reviewed the impugned order and noted the appellant's payment of a significant sum towards the duty before the show cause notice. The authority found that the lower authorities failed to apply the provisions under Section 11AC, thus reducing the penalty on the main appellant to 25% of the confirmed duty. The appellant was directed to pay the reduced penalty within 30 days, with a warning of 100% duty payment in case of failure to comply. Additionally, as the main appellant had settled the duty and penalty before the show cause notice, the proceedings against all noticees, including Shri Praveen Chadha, were concluded, resulting in the setting aside of penalties on Shri Praveen Chadha. Consequently, the appeals were disposed of in accordance with the above decisions, as pronounced on 23-2-2015.