2018 (1) TMI 409 - AT - Central Excise

Validity of SCN - appellants admitted their mistake and immediately paid the entire amount of duty along with interest and 25% of duty amount as penalty, in terms of Section 11A (6) of the CEA 1944 - Held that - the proceedings are not required to be initiated against the assessee if the duty, interest and 25% of the duty has been paid before issuance of SCN and the same is intimated to the Central Excise officers - Admittedly, in this case, the appellant has complied with the provisions of Section 11A (5) (6) (7) of the Act. Therefore, no SCN is required to be issued to the appellants - appeal allowed.

Summary

Issues:
- Imposition of redemption fine and penalty on the appellant
- Appropriation of duty, interest, and penalty already paid
- Confiscation of seized goods
- Demand of duty along with interest
- Imposition of redemption fine and penalty
- Compliance with Section 11A (6) of the Central Excise Act, 1944

Analysis:
The appellant appealed against an order imposing redemption fine and penalty, where duty, interest, and penalty equal to 25% of duty already paid were appropriated. The case originated from a visit by Central Excise officers to the appellant's factory premises, leading to the seizure of goods due to a shortage of finished products. The appellant promptly paid the duty, interest, and 25% of duty as penalty under Section 11A (6) of the Central Excise Act, 1944. Subsequently, a show cause notice was issued to appropriate the amount paid, confiscate the seized goods, demand duty with interest, and impose redemption fine and penalty. The matter was adjudicated, resulting in the confiscation of goods and the imposition of penalty, prompting the appellant to appeal.

The appellant contended that as per Section 11A (6) of the Act, if duty, interest, and 25% of duty as penalty are paid before the show cause notice is issued, no such notice is necessary. On the contrary, the respondent argued that the case involved clandestine removal, justifying the confiscation of goods and the imposition of redemption fine and penalty. After hearing both parties and considering the submissions, the judge examined the provisions of Section 11A (5), (6), and (7) of the Act. These sections outline the procedure for recovery of duties and state that if duty, interest, and 25% of duty as penalty are paid before the show cause notice is served, no notice is required, and the proceedings are deemed concluded.

Upon reviewing the relevant provisions and the appellant's compliance with Section 11A, the judge concluded that since the appellant had fulfilled the payment requirements before the show cause notice, the impugned order exceeded the legal scope. Consequently, the judge set aside the order, allowing the appeals with consequential relief. The judgment emphasized the importance of complying with statutory provisions and highlighted that in cases where payments are made as per the law, show cause notices may not be necessary, ultimately leading to a favorable outcome for the appellant.