2016 (9) TMI 1013 - AT - Central Excise

Imposition of penalty - Section 11AC of Central Excise Act, 1944 - manufacture and clearance of Electroplating Chemicals like Gold Potassium Cynide (GPC) without payment of duty - Commissioner (Appeals), has not extended an option to pay 25% of the penalty as prescribed under Section 11AC of Central Excise Act, 1944 - Held that - it is found that the learned Commissioner (Appeals) has analyzed the evidences and arrived at the conclusion that the Appellant has indulged in clandestine manufacture and clearance of GPC during the relevant period. Also, he has considered the role of the Managing Director Shri Chandrakantbhai L. Shah in the said activity of the Appellant of clandestine manufacture and clearance of GPC. Therefore, I do not find any reason to record a different finding than that arrived at by the learned Commissioner (Appeals). Reduction of mandatory penalty - Held that - I do not see any justification in the impugned order in reducing mandatory penalty imposed under Section 11AC of Central Excise Act, 1944 from ₹ 2,29,360/- to ₹ 1.00 lakhs. The Hon ble Supreme Court in the case of Union of India Vs Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT has held that the mandatory penalty imposed under Section 11AC of Central Excise Act, 1944 cannot be reduced. Also, I do not find any reason to interfere with the penalty imposed on the Director as held in the impugned order of the learned Commissioner (Appeals). Therefore, the mandatory penalty as ordered by the Adjudicating authority is restored. However, the Appellant are eligible to exercise the option to pay 25% of the said penalty amount of ₹ 2,29,360/- in view of the judgment of Hon ble Gujrat High Court in the case of CCE Vs Harish Silk Mills 2010 (2) TMI 494 - GUJARAT HIGH COURT and CCE Vs G.P.Presstress Concrete Works 2012 (8) TMI 933 - GUJARAT HIGH COURT on fulfillment of the conditions laid down under Sec. 11AC of CEA, 1944. - Decided partly in favour of appellant

Summary

Issues:
1. Reduction of penalty under Section 11AC of Central Excise Act, 1944.
2. Imposition of personal penalty on the Director of the Appellant.
3. Eligibility to exercise the option to pay 25% of the penalty amount.

Analysis:

Reduction of Penalty under Section 11AC of Central Excise Act, 1944:
The case involved appeals filed by the Assessee-Appellant and the Revenue against the Order-in-Original passed by the Commissioner (Appeals) regarding the imposition of penalties for clandestine manufacture and clearance of goods. The Appellant raised concerns about the penalty imposed under Section 11AC not being reduced as per the option to pay 25% of the penalty. The Revenue argued that the reduction of the mandatory penalty was contrary to established legal principles. The Tribunal found that the Commissioner (Appeals) erred in reducing the penalty and reinstated the mandatory penalty amount, citing the precedent set by the Hon'ble Supreme Court in a relevant case.

Imposition of Personal Penalty on the Director of the Appellant:
The Appellant contested the imposition of a personal penalty on the Director, claiming his lack of involvement in the day-to-day activities of the company. However, the Revenue argued that the Director's admission and evidence indicated his role in the clandestine activities. The Tribunal upheld the penalty on the Director, concluding that he was indeed involved in the unauthorized manufacture and clearance of goods, as established by the evidence presented.

Eligibility to Exercise the Option to Pay 25% of the Penalty Amount:
The Appellant sought the option to pay 25% of the penalty amount under Section 11AC of the Central Excise Act, 1944. The Tribunal acknowledged the Appellant's eligibility to exercise this option based on previous judgments of the Hon'ble Gujarat High Court, provided the conditions under Section 11AC were fulfilled. Consequently, the Appellant was allowed to pay 25% of the penalty amount.

In conclusion, the Tribunal partially allowed the appeal filed by the Appellant Company, rejected the appeal filed by the Director of the Appellant Company, and allowed the Revenue's appeal. The Tribunal restored the mandatory penalty amount, upheld the penalty on the Director, and granted the Appellant the option to pay 25% of the penalty as per legal provisions and precedents.