2009 (1) TMI 194 - AT - Central Excise

Deposit of duty / demand within 30 days penalty reduced to 25% - held that In order to qualify for the above benefit the assessee should have paid the duty due and the interest payable thereon under Section 11AB within 30 days of the communication of the order of the Central Excise officer determining such duty. In the instant case, the respondents paid part of the duty determined in the order of the original authority and the applicable interest after the impugned order was passed. Obviously, the respondents did not qualify for the benefit under the proviso to Section 11AC of the Act. the benefit of reduction in amount of penalty is not available equal penalty of demand is payable.

Summary

Issues:
1. Duty evasion and penalty imposition under Section 11A of the Central Excise Act, 1944.
2. Applicability of penalty amount as per Section 11AC.
3. Benefit eligibility under the proviso to Section 11AC for payment within 30 days.
4. Interpretation of judgments by the Hon'ble Supreme Court and Delhi High Court.

Analysis:

Issue 1: The case involved M/s. Ponneri Steel Industries evading excisable goods' duty payment of Rs. 66,506 in July 2002. The original authority imposed penalties under Section 11A, 11AC, Rule 25 of CER, and demanded interest under Section 11AB. Penalties were also imposed on specific individuals of the firm.

Issue 2: The appeal primarily focused on imposing an equal penalty under Section 11AC on the respondent firm. The Revenue argued that the Supreme Court's judgment in Union of India v. Dharmendra Textile Processors mandated equal penalties for duty evasion due to fraud or willful misstatement.

Issue 3: The respondents claimed entitlement to pay only 25% of the duty as a penalty under the proviso to Section 11AC. They referenced the Delhi High Court's judgment in K.P. Pouches (P) Ltd. v. Union of India, arguing that early payment of most of the duty before the Show Cause Notice entitled them to the benefit.

Issue 4: The Tribunal analyzed the facts and submissions. The judgment differentiated the case from the Delhi High Court's decision, emphasizing that the respondents did not qualify for the proviso benefit as they paid part of the duty and interest after the impugned order. The Tribunal allowed the appeal partially, restoring the equal penalty under Section 11AC on the respondents.

In conclusion, the Tribunal allowed the appeal in part, restoring the equal penalty imposed under Section 11AC on the respondent firm. The decision was based on the non-qualification of the respondents for the proviso benefit due to the timing of their duty payment.