2015 (10) TMI 1665 - AT - Central Excise

Penalty u/s 11AC - Held that - Adjudicating authority had not given any option to pay reduced penalty, under Section 11AC of the said Act. So, this issue is covered in favour of the Respondent as held by the Hon ble Gujarat High Court 2010 (2) TMI 1148 - GUJARAT HIGH COURT . The other issue regarding imposition of penalty on the partner, the Hon ble Gujarat High Court held that no further penalty can be imposed on the partner as the firm is already penalised. In the present case, it is seen that penalty of equal amount of duty on the partnership firm was imposed under Section 11AC of the Central Excise Act. - Decided against Revenue.

Summary

Issues:
1. Reduction of penalty under Section 11AC of the Central Excise Act by Commissioner (Appeals).
2. Imposition of penalty on the partner of a partnership firm.

Analysis:

Issue 1: Reduction of penalty under Section 11AC
The Revenue filed an appeal against the order of the Commissioner (Appeals) which allowed a reduced penalty of 25% of the duty amount under Section 11AC of the Central Excise Act. The Revenue argued that this decision contradicted a ruling by the Hon'ble Bombay High Court in a specific case. However, the Respondent cited a judgment by the Hon'ble Gujarat High Court in a similar matter where the appeal by the Revenue was rejected. The Tribunal noted that the adjudicating authority did not provide the option to pay a reduced penalty. Citing the Gujarat High Court's decision upheld by the Supreme Court, the Tribunal ruled in favor of the Respondent on this issue.

Issue 2: Imposition of penalty on the partner
Regarding the imposition of a penalty on the partner of a partnership firm, the Revenue contended that the partner was penalized without sufficient reason. The Respondent referred to a judgment by the Hon'ble Gujarat High Court which stated that once the firm is penalized, a separate penalty on the partner is not permissible as the partner is not a distinct legal entity. The Tribunal concurred with this view, emphasizing that in the present case, a penalty equal to the duty amount was already imposed on the partnership firm under Section 11AC of the Central Excise Act. Therefore, the Tribunal rejected the Revenue's appeal, concluding that no further penalty could be imposed on the partner.

In summary, the Tribunal upheld the decisions of the Gujarat High Court and the Supreme Court, dismissing the Revenue's appeal and ruling in favor of the Respondent on both issues raised in the case.