2018 (2) TMI 754 - HC - Customs

Whether the Tribunal can override the statutory provisions enshrined in the law inasmuch as the second proviso to Section 114A of Customs Act, 1962, has been ignored in reducing the penalty wherein specific provisions are enlisted that the benefit of reduced penalty shall be available only when penalty is paid within 30 days of the date of communication of the Order which is not in the present matter? Held that - the issue squarely covered by the decision in the case of Commissioner of Central Excise, Jaipur-I Versus. M/s. Lucky Plast Ltd. and others 2015 (9) TMI 825 - RAJASTHAN HIGH COURT , where it was held that The central excise duty is payable on the manufacture of excisable goods. It is not payable on the issuance of the show cause notice, or at any time thereafter. The Proviso to Section 11AC is applicable, if the payment is made within 30 days of communication of the order levying penalty, and not from the date of issuance of the show cause notice. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Challenge to Tribunal's judgment and order regarding penalty reduction under Customs Act, 1962.

Analysis:
The appellant challenged the Tribunal's decision that partly allowed the appeal by the assessee. The substantial question of law framed by the Court was whether the Tribunal can override statutory provisions, specifically the second proviso to Section 114A of the Customs Act, 1962, related to reduced penalty payment timelines. The appellant contended that a previous decision by the Court favored the department in a similar matter.

The Central Excise Department's counsel argued that the Tribunal erred in reducing the penalty amount based on the first proviso to Section 11AC of the Act. The counsel highlighted that the duty reduction to 25% is only applicable if the penalty is paid within 30 days of the communication of the order, not from the issuance of the show cause notice. The unamended Section 11AC was cited to support this argument.

It was clarified that central excise duty is payable on the manufacture of excisable goods, not upon issuance of show cause notices. The proviso to Section 11AC applies when payment is made within 30 days of the order levying the penalty, not from the show cause notice date. Previous judgments cited by the assessee's counsel were deemed irrelevant as they did not consider the unamended Section 11AC proviso.

In conclusion, the issue was decided in favor of the department, and the appeal was allowed based on the interpretation of the statutory provisions and the timeline for penalty payment as per the relevant sections of the Act. The judgment provided a clear analysis of the legal provisions and their application in the context of the case, ensuring adherence to the statutory framework governing penalty reductions under the Customs Act, 1962.