2016 (9) TMI 279 - AT - Central Excise

Imposition of penalties - entire amount of duty along with interest and penalty equal to 25% of duty was paid prior to issuance of show cause notice - Held that - as is evident from provision of Section 11A (1A) & (2) of the Central Excise Act, 1944, once the entire amount of duty, interest and penalty equal to 25% of the duty demanded was remitted even before the issuance of show cause notice as is evident from the primary adjudication orders in terms of which the same have been duly appropriated, the proceedings were deemed to be conclusive even in respect of other persons to whom notice was served. Therefore, the appeals are allowed to the extent that penalties in excess of 25% of the duty in respect of M/s N.S. Ispat (India) Pvt. Ltd. and M/s Hanuman Ispat Pvt. Ltd. and penalty on Shri Shyam Bansal are set aside. - Decided partly in favour of appellant

Summary

Issues:
Appeal against orders-in-appeal upholding duty demands, interest, and penalties. Contention regarding penalty in excess of the penalty already paid. Interpretation of Section 11A of the Central Excise Act, 1944.

Analysis:
The appeal was made against orders-in-appeal that upheld duty demands, interest, and penalties. The appellant's representative argued that the entire duty amount, interest, and a penalty equal to 25% of the duty had been paid before the show cause notice was issued. The advocate contended that under Section 11A of the Central Excise Act, 1944, no adjudication order needed to be issued in such circumstances. The only point of dispute was the penalty exceeding the amount already paid. The Departmental Representative (DR) supported the impugned order.

Upon considering both sides' arguments, the Tribunal noted that the duty, interest, and mandatory penalty had been deposited before the issuance of show cause notices. Referring to Section 11A (1A) & (2) of the Central Excise Act, it was observed that the law allowed for payment of duty, interest, and a penalty equal to 25% of the duty demanded within thirty days of receiving a notice. The Tribunal emphasized that once the full amount was paid before the notice, the proceedings were deemed conclusive, even for other parties served notice.

The advocate clarified that they were not contesting the interest and penalty already paid and appropriated in the impugned orders. Consequently, the Tribunal allowed the appeals to the extent that penalties exceeding 25% of the duty for two companies and the penalty for an individual were set aside. The judgment highlighted the significance of complying with payment obligations under the Central Excise Act to conclude proceedings conclusively.