2017 (5) TMI 1754 - AT - Central Excise

Imposition of penalty equivalent to duty confirmed - seeking reduction in quantum of penalty - appellant made the payment of their dues along with 25% of penalty on 28.2.2009 i.e. within 30 days of the receipt of the order-in-original - Section 11AC of Central Excise Act, 1944 - HELD THAT - From the facts on record, it is clear that in this case the entire amount of duty of ₹ 15,75,198/- along with interest and 25% of total penalty was paid voluntarily and this payment was made before the expiry of 30 days period from the receipt of order-in-original - The First proviso to then Section 11AC of Central Excise Act, 1944 says that where duty, interest and 25% of penalty is paid by the assessee within 30 days from the date of communication of the order of Central Excise officers determining the liability of duty etc., the benefit of reduced penalty of 25% will be allowed to the assessee. In the present case, the appellant made the required payment within 30 days of receipt of the order-in-original, therefore, they are entitled to the benefit of payment of penalty at reduced rate of 25% of the duty - Appeal allowed in part.

Summary

Issues:
1. Imposition of penalty equivalent to duty confirmed.
2. Benefit of reduced penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
1. The appellant, M/s Logic Poly Products, appealed against Order-in-Appeal No. 142/2009 dated 22.7.2009, where the imposition of penalty equivalent to the confirmed duty was sustained. Both sides were represented by their respective counsels, Shri Manish Saharan for the appellant and Shri R.K. Manjhi for the Revenue. The appellant contended that they made the payment of dues along with 25% of penalty within 30 days of receiving the order-in-original, thus claiming entitlement to the benefit of reduced penalty.

2. The key contention revolved around the interpretation of the First proviso to Section 11AC of the Central Excise Act, 1944. This provision stipulates that if an assessee pays duty, interest, and 25% of penalty within 30 days from the communication of the order determining the liability, they are entitled to a reduced penalty of 25%. In this case, it was established that the appellant had voluntarily paid the entire duty amount of ?15,75,198, along with interest and 25% penalty, within the specified timeframe from the receipt of the order-in-original.

3. Considering the timely payment made by the appellant, the Tribunal, led by Hon’ble Mr. Ashok K. Arya, Member (Technical), concluded that the appellant met the requirements for availing the benefit of reduced penalty under Section 11AC. Consequently, the impugned order was modified to reflect this decision, and the appeal was partly allowed in favor of the appellant. The judgment emphasized the importance of adhering to statutory timelines and fulfilling payment obligations to avail such benefits under the relevant legal provisions.

4. This detailed analysis of the judgment highlights the significance of procedural compliance and timely payment in matters concerning the imposition and reduction of penalties under the Central Excise Act, 1944. The case serves as a precedent illustrating how adherence to statutory provisions can impact the outcome of appeals and legal proceedings before the Appellate Tribunal CESTAT NEW DELHI.