2017 (5) TMI 230 - AT - Central Excise

Imposition of penalty of equal amount - Section 11A(1A) - denial of benefit of reduced penalty on the ground that the respondent has not paid entire amount within a period of one month from the date of receipt of the SCN - Held that - respondent have paid entire duty, interest and 25% penalty imposed under Section 11AC up to 3-5-2008 and adjudication order was passed on 17-7-2008 which shows that respondent paid duty, interest and 25% penalty not only within 30 days from the date of the order but much before that - respondent s case is squarely covered by above clause (c) of Section 11AC(1) therefore under any circumstances the department s proposal to impose penalty of 100% of the duty does not hold good - even as per Section 11AC(1)(c) penalty of 25% is only payable and not 100% - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Appeal against reduction of penalty under Section 11A(1A) of Central Excise Act, 1944.

Analysis:
The appeal was filed by the Revenue against the Order of the Commissioner(Appeals) which reduced the penalty on the respondent from an equal amount of duty to 25% of the total penalty by invoking Section 11A(1A) of the Central Excise Act, 1944. The Revenue contended that the Commissioner(Appeals) erred in reducing the penalty and argued that the respondent did not pay the total amount as required under Section 11A(1A) within 30 days from the receipt of the show cause notice. The Revenue sought a penalty of an equal amount of duty instead of 25% as ordered by the Original adjudicating authority.

The Superintendent(A.R.) representing the Revenue argued that the reduced penalty of 25% was not applicable in this case as the respondent did not pay the entire amount within one month from the date of receipt of the show cause notice. The Counsel for the respondent countered by stating that despite a procedural lapse causing a delay in payment, the respondent eventually paid the entire duty, interest, and 25% penalty before adjudication, entitling them to the benefit under Section 11A(1A). The Counsel further argued that even under Section 11AC(1)(c), a penalty of 100% could not be imposed as the respondent had complied with the payment requirements.

Upon careful consideration, the Tribunal found that the respondent had indeed paid the entire duty, interest, and 25% penalty before the adjudication order was passed, thereby falling under clause (c) of Section 11AC(1). The Tribunal highlighted the provisions of Section 11AC(1) regarding penalties for non-levy or short-levy of duty, emphasizing that in the present case, the penalty of 25% was applicable as per the mentioned clause. Consequently, the Tribunal upheld the impugned order, dismissing the Revenue's appeal as the penalty of 25% was deemed appropriate under the circumstances.

In conclusion, the Tribunal's judgment clarified the application of Section 11A(1A) and Section 11AC(1)(c) in the context of the case, affirming that the respondent's compliance with payment requirements warranted the reduced penalty of 25% instead of 100%. The decision served as a legal interpretation of the relevant provisions, ultimately leading to the dismissal of the Revenue's appeal.