2016 (5) TMI 1120 - AT - Central Excise

Waiver of penalty imposed - Rule 26 of the Central Excise Rules, 2002 - Main noticee against whom duty, interest and penalty was proposed have paid duty, interest and 25% of penalty within one month from the date of show cause notice, therefore, the proceedings against the present appellant should also stands concluded along with the main assessee Held that - the duty liability has been discharged after the issuance of show cause notice. In my view, the benefits which are available to an assessee prior to issuance of show cause notice should also be extended after the issuance of show cause notice, if liability is discharged before the adjudication order. Be that as it may, the issue seems to be covered by the Division Bench decision of this Tribunal in the case of Sonam Clock Pvt. Limited & Others v. CCE, Rajkot 2012 (10) TMI 78 - CESTAT, AHMEDABAD (wherein I was one of the Member). I do not find any merits in the grounds raised by the Revenue that assessee may seek refund of the amount as that the entire order-in-original is set aside as the first appellate authority has considered the extension of benefits of Section 11A to the assessee only on the ground that he has paid the amount in full. If the assessee would not have paid this amount, this benefit would not have been extended to him. Therefore all the appellants are entitled for the immunity as per proviso to Section 11A (2) and accordingly they are entitled for the waiver of penalty imposed on them under Rule 26 of the Central Excise Rules, 2002. - Decided in favour of appellant

Summary

Issues:
Interpretation of the first proviso to Sub-Section (2) of Section 11A of the Central Excise Act regarding liability of co-noticees when the main appellant settles the duty, interest, and penalty; Contradictory views by different Tribunals on the issue.

Analysis:
The main issue in this case revolves around whether the liability of co-noticees is concluded when the main appellant settles the duty, interest, and penalty within one month of the show cause notice. The Ld. Commissioner (Appeals) interpreted the first proviso to Sub-Section (2) of Section 11A to suggest that only the proceedings against the main assessee would be conclusive, not the co-noticees. The appellants argued that once the main assessee pays the dues, all proceedings should stand concluded, citing various judgments to support their stance. The Revenue, however, reiterated the findings of the impugned order and pointed out contradictory views by other Tribunals in similar cases.

The Tribunal carefully considered the submissions and referred to various judgments to support its decision. It noted that when the main assessee settles the duty, interest, and 25% penalty within the specified period, proceedings against co-noticees should also be concluded. The Tribunal cited specific cases where similar issues were resolved in favor of concluding proceedings against all noticees once the main appellant fulfills the obligations. The Tribunal emphasized that the provisions of Section 11A(1A) coupled with the proviso to Sub-Section (2) clearly indicate that settling the duty liability ends the proceedings, even without the need for a show cause notice. The Tribunal distinguished contradictory judgments cited by the Revenue, stating that those cases did not consider all relevant precedents and rulings. Ultimately, the Tribunal held that all appellants were entitled to immunity under the proviso to Section 11A(2), leading to the waiver of penalties imposed on them under Rule 26 of the Central Excise Rules, 2002.

In conclusion, the Tribunal's decision clarified the interpretation of the law regarding the liability of co-noticees when the main appellant settles the duty, interest, and penalty. By referencing relevant judgments and legal provisions, the Tribunal established a consistent approach to concluding proceedings against all noticees in such scenarios, providing clarity and guidance on the matter.