2017 (12) TMI 487 - AT - Central Excise

Clandestine removal - penalty - Held that - Since, the proprietor himself has admitted the fact, there is no need for any further corroboration is my view and the demand which is confirmed by the first appellate authority is correct, legal and does not require any interference, also interest liability thereunder. The provisions of Section 11 AC indicate that when there is reduction of incidence of demand of duty, in the appellate proceedings, the penalty liability also has to be recalculated as per the provisions of Section 11 AC of CEA, 1944 and the first appellate authority should have extended the benefit of reduced penalty of ₹ 25% of the amount of ₹ 2,85,325/-. Appeal disposed off.

Summary

Issues:
Confirmation of duty demand for clandestine removal of finished goods, applicability of penalty, interpretation of Section 11 AC of CEA, 1944.

Analysis:
The appeal in question pertains to the confirmation of duty demand for clandestine removal of finished goods during a specific period. The appellant admitted the removal of goods without discharging the appropriate central excise duty, leading to a duty liability of ?2,85,325. Subsequently, a show cause notice was issued, resulting in a demand of ?6,19,464 being confirmed, along with penalties. The first appellate authority reduced the duty liability to ?2,85,325, sustained interest demand and an equivalent penalty, while dropping penalties against certain parties. The appellant argued against the penalty proceedings, citing discrepancies in the stock of goods and invoking legal precedents for penalty reduction.

The Tribunal found that the appellant's proprietor had admitted to the clandestine removal during an official visit, justifying the confirmed demand. However, considering the reduction in duty liability, the penalty was recalculated as per Section 11 AC of the Central Excise Act, 1944. Referring to a High Court decision, the Tribunal directed the penalty against the appellant to be set at 25% of ?2,85,325, provided the appellant paid the penalty and interest within 30 days. The Tribunal emphasized the legal requirement to adjust penalties in line with duty demand reductions, ensuring compliance with statutory provisions.

In conclusion, the Tribunal upheld the duty demand for clandestine removal of goods, adjusted the penalty in accordance with Section 11 AC, and directed the appellant to pay the recalculated penalty and interest within a specified timeframe. The judgment highlights the importance of aligning penalty liabilities with changes in duty demands as per statutory provisions, ensuring fair and consistent application of the law in excise duty matters.