2019 (2) TMI 851 - AT - Central Excise

Benefit of reduced penalty - short-payment of Central Excise duty by not adopting valuation as per Section 4A of Central Excise Act, 1944 - automotive glass cleared to certain customers in packaged condition during the period September 2009 to November 2013 - penalty on Director of the Company - Held that - Both the authorities have not considered the amendment which was effected in 2015 by Finance Bill 2015 wherein the provisions with regard to payment of reduced penalty of 15% was introduced. Further, in the present case, the Deputy Commissioner passed the Order-in-Original on 30/06/2015 whereas the reduced penalty equivalent to 15% of duty was paid by the appellant on 01/06/2015 which was well within a period of 30 days from the passing of the Finance Act, 2015 on 14/05/2013. Therefore in view of the amended provision, the appellant was entitled to the benefit of reduced penalty. Penalty on Director of the Company - Held that - Once the proceedings against the main noticee i.e. the company are concluded on payment of reduced penalty of 15%, the proceedings against the co-noticee stands concluded. Impugned order set aside by allowing the appeals of the appellants insofar as the imposition of penalty in excess of reduced penalty of ₹ 46,923/- already paid and personal penalty of ₹ 1 lakh on the Director - appeal allowed.

Summary

Issues:
Appeal against rejection of appeals by Commissioner (Appeals) regarding short-payment of Central Excise duty, imposition of penalty, and personal penalty on Director.

Analysis:
The appellants, engaged in manufacturing glass products, were accused of short-payment of Central Excise duty for a specific period. They accepted the allegations during investigation and paid a certain amount towards the duty liability. A show-cause notice was issued demanding duty, interest, and penalty. The appellants contended that they had overpaid, but the Deputy Commissioner imposed penalties. The appellants argued that they were entitled to reduced penalty under amended provisions of Section 11AC, paid within the stipulated time frame. The Deputy Commissioner's decision was challenged before the Commissioner (Appeals).

During the hearing, the appellant's counsel highlighted that the reduced penalty was paid within the specified time, entitling them to the benefit under the amended provisions. They referenced relevant legal provisions and a previous case to support their argument. Additionally, they argued that once the main company paid the reduced penalty, proceedings against the Director should also conclude, citing a tribunal decision.

On the contrary, the respondent defended the impugned order issued by the Commissioner (Appeals). After considering both parties' submissions and examining the records, the Judicial Member found that the authorities had not considered the 2015 amendment introducing provisions for reduced penalty payment. The Judicial Member concluded that the appellants were indeed entitled to the benefit of reduced penalty, as supported by a previous tribunal decision. Consequently, the imposition of equal penalty was deemed unsustainable and set aside. Regarding the personal penalty on the Director, it was held that once the main company's proceedings were concluded with the reduced penalty payment, the Director's penalties should also be concluded, in line with a previous tribunal ruling.

In the final judgment, the Judicial Member deemed the impugned order unsustainable and set it aside, allowing the appeals in favor of the appellants concerning the excess penalty imposed and the personal penalty on the Director. The decision was pronounced in open court on a specified date.