2010 (4) TMI 412 - AT - Central Excise

Penalty- Assessee conceding duty liability based on suppression of facts with intent to evade payment of duty. Held that- this fulfilled the requirement of penal liability under section 11AC of the Act and payment of duty prior to issuance of show cause notice could not alter it. Thus the assessee s plea that matter should be remanded to original authority as if had not given them express option in terms of first proviso of section rejected.

Summary

Issues:
1. Confirmation of demand of duty under Section 11A of the Central Excise Act.
2. Imposition of penalty under Section 11AC.
3. Challenge against penalties imposed on the appellant.
4. Interpretation of the first proviso to sub-section (1) of Section 11AC.
5. Applicability of penalties under Rule 226 of the Central Excise Rules.

Analysis:

1. The original authority confirmed a duty demand of Rs. 1.35 lakhs against the assessee under Section 11A of the Central Excise Act, along with a penalty under Section 11AC and interest under Section 11AB. Additionally, a penalty of Rs. 25,000 was imposed on the assessee under Rule 226 of the Central Excise Rules. The appeal against this order was rejected by the Commissioner (Appeals), leading to the present appeal by the assessee.

2. The appellant disowned duty liability in the appeal, but did not challenge the demand of duty. The primary challenge at this stage focused on the penalties imposed.

3. The main argument against the penalty under Section 11AC was the absence of an express option given to the assessee, as per the first proviso to sub-section (1) of Section 11AC. The appellant sought a remand based on a High Court judgment, but the Tribunal did not find this argument compelling, citing a Supreme Court judgment clarifying the penal liability under Section 11AC.

4. Regarding the penalty of Rs. 25,000 imposed on the appellant under Rule 226, the appellant argued that the maximum penalty at that time was Rs. 2,000. The Tribunal agreed with this contention and reduced the penalty amount accordingly.

5. The Tribunal upheld the penalty equal to duty imposed under Section 11AC, as the duty liability based on the proviso to Section 11A(1) was conceded by the appellant. The penalty under Rule 226 was reduced to Rs. 2,000, in line with the maximum penalty provision under that rule. The appeal was disposed of with these modifications to the penalties imposed.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT, Mumbai, and the rationale behind the decisions made concerning duty demands, penalties, and relevant legal provisions.