2009 (1) TMI 113 - HC - Central Excise

Whether tribunal is justified in reducing the mandatory penalty levied u/s 11AC - Tribunal has reduced the penalty to 25% of the sum - admittedly assessee has complied with the first proviso of Section 11AC by paying the amount prior to the raising of demand - Accordingly the equivalent penalty under Section 11AC of the Act shall stand reduced to 25% if the assessee complies with requirement of second proviso to Section 11AC no infirmity in tribunal s order of reducing the penalty

Summary

Issues:
Reduction of penalty under Section 11AC of the Central Excise Act despite duty confirmation and payment before the show-cause notice.

Analysis:
The appeal challenges the order made by the Customs, Excise, and Service Tax Appellate Tribunal, where the penalty under Section 11AC of the Central Excise Act was reduced despite the confirmation of duty demand on clandestine removal. The adjudicating authority confirmed the duty demand of Rs.1,03,628 on illicitly removed goods and imposed a penalty of the same amount on the assessee. The penalty was to be reduced to 25% if the assessee complied with the second proviso to Section 11AC. The respondent-assessee appealed but did not succeed, leading to a further appeal before the Tribunal which reduced the penalty to Rs.25,907, 25% of the original amount.

The main issue revolves around the interpretation of Section 11AC of the Act, which provides for the levy of penalties in cases of short-levy or non-levy of duty. The first proviso allows for a reduced penalty of 25% if duty and interest are paid within thirty days of the order determining such duty. The second proviso requires the penalty amount to be paid within the same period to avail of the reduced penalty. In this case, the duty amount was paid before the demand was raised, meeting the criteria of the first proviso. Hence, the Tribunal reduced the penalty amount in line with the statutory provisions.

The Tribunal's decision to reduce the penalty was based on the specific facts of the case and the requirements of Section 11AC. The duty amount was paid before the demand was raised, fulfilling the conditions for a reduced penalty under the first proviso. As a result, the penalty was rightly reduced to 25% of the original amount. The Court dismissed the appeal, stating that there was no substantial question of law to challenge the reduction in penalty. The decision was made in accordance with the provisions of the Act and the specific circumstances of the case.

In conclusion, the judgment upholds the reduction of the penalty under Section 11AC of the Central Excise Act based on the timely payment of duty before the demand was raised. The Tribunal's decision was found to be in line with the statutory requirements, and the appeal was dismissed due to the absence of any substantial legal issues raised by the appellant.