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2009 (7) TMI 346 - AT - Central ExciseQuantum of penalty - Original Adjudicating Authority confirmed the demand of duty under Section 11AC of Central Excise Act. By taking note of the fact that the said duty was deposited before issuance of show cause notice, he imposed penalty to the extent of 25% of duty amount - said order was appealed against before Commissioner (Appeals). The assessee contended before the appellate authority that 25% of the penalty amount stands paid by them within a period of 30 days from the communication of the order. The Commissioner (Appeals) allowed the Revenue s appeal and enhanced the penalty equal to duty amount - the option to pay 25% of the duty is required to be given by the adjudicating authority in terms of the first proviso to Section 11AC. If no such option was given, the order cannot be held to be legal and valid. - if penalty is enhanced by subsequent orders of the appellate authority, the period of 30 days would start running from the date of communication of that order - Commissioner (Appeals) enhanced penalty equal to the duty amount but did not give any option to the assessee to deposit 25% of the enhanced amount within a period of 30 days - Having now raised the penalty amount to the extent of duty, in terms of Hon ble Supreme Court judgment in the case of UOI v. Dharamendra Textile Processors reported in 2008 - TMI - 31520 - SUPREME COURT , I give an option to the assessee to pay 25% of enhanced amount of penalty within a period of 30 days from the communication of the present order
Issues:
1. Confirmation of duty demand under Section 11AC of Central Excise Act. 2. Imposition of penalty equal to duty amount under Section 11AC by Commissioner (Appeals). 3. Justification of penalty to the extent of 25% by the Assistant Commissioner. 4. Directions to decide penalty afresh in light of the Supreme Court judgment. 5. Requirement to impose penalty to the extent of 100% of duty amount under Section 11AC. 6. Deposit of 25% penalty within 30 days and the legal validity of the order. Issue 1: The Original Adjudicating Authority confirmed the duty demand of Rs. 57,936 under Section 11AC of the Central Excise Act. The penalty imposed was 25% of the duty amount. The Commissioner (Appeals) enhanced the penalty to the duty amount, citing the provisions of Section 11AC. The appeal was remanded for fresh consideration by the Hon'ble Gujarat High Court. Issue 2: The Commissioner (Appeals) justified enhancing the penalty to the duty amount, stating that Section 11AC does not empower reducing the penalty to 25% of the imposable amount. The order was set aside, directing the firm to pay penalty equal to the duty evaded. Issue 3: The Tribunal, following the Delhi High Court judgment, upheld the 25% penalty imposed by the Assistant Commissioner. However, the Gujarat High Court directed a fresh decision on the penalty in light of the Supreme Court judgment in UOI v. Dharamendra Textile Processors, which requires a penalty of 100% of the duty amount under Section 11AC. Issue 4: The Tribunal, after considering the Supreme Court judgment, upheld the Commissioner (Appeals) decision to enhance the penalty to the duty amount. The P & H High Court's ruling emphasized that the option to pay 25% of the duty must be given by the adjudicating authority, failing which the order would be deemed invalid. Issue 5: In compliance with the Supreme Court's directive, the Tribunal provided the option to pay 25% of the enhanced penalty amount within 30 days. Failure to provide this option renders the order legally invalid. The appeal was disposed of accordingly.
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