2017 (9) TMI 1426 - AT - Central Excise

Benefit of reduced penalty u/s 11 AC of the CEA, 1944 - duty demand paid within 30 days of the date of order-in-original and the interest and 25% of penalty was paid thereafter within 10 days - Held that - the adjudicating authority has to mention in the order that such an option is available to the appellant to pay reduced penalty of 25% if the duty demand, interest and reduced penalty is paid within 30 days of communication of the adjudication order - the impugned order can be modified to the extent of reducing the penalty to 25% without disturbing the demand of duty or interest - appeal allowed in part.

Summary

Issues Involved:
1. Benefit of reduced penalty under Section 11 AC of the Central Excise Act, 1944 not granted by authorities.

Analysis:
The appellant argued that they were not given the opportunity to avail the benefit of reduced penalty in accordance with the proviso to Section 11 AC of the Central Excise Act, 1944. The appellant contended that they had paid the duty demand within 30 days of the order-in-original and subsequently paid the interest and 25% of the penalty. The appellant relied on precedents to support their claim that the authorities should have explicitly informed them of the option for reduced penalty. The appellant emphasized that without being informed of this option, they could not take advantage of the reduced penalty provision.

The respondent, however, maintained that the proviso to Section 11 AC clearly states that the benefit of reduced penalty can be availed if the duty, interest, and reduced penalty are paid within 30 days of the communication of the adjudication order. The respondent argued that since the appellant did not pay the reduced penalty within the specified period, they could not request it at the appellate stage.

Upon considering both arguments, the Tribunal found that the appellant did not contest the duty demand or interest but solely raised the issue of not being given the opportunity to pay the reduced penalty of 25% of the duty demand. The Tribunal noted that the authorities below had failed to provide the option of reduced penalty to the appellant in their orders. Citing relevant judgments and a circular, the Tribunal concluded that the appellant should have been informed of the option to pay the reduced penalty. As the appellant had already paid the duty demand, interest, and 25% of the penalty, the Tribunal decided to modify the impugned order by reducing the penalty to 25% without affecting the duty or interest amounts.

Therefore, the appeal was partly allowed, granting the appellant relief by reducing the penalty to 25% as per the provisions of Section 11 AC of the Central Excise Act, 1944.