2010 (2) TMI 560 - HC - Central Excise

Option to pay 25% Penalty - If the duty amount with interest is not paid in time and even reduced penalty of 25% of the duty amount is not paid in time and option is not given to the respondent-assessee, we have taken the new that such option should be given to the assessee and period of 30 days would commence from the date of giving such option

Summary

Issues:
Reduction of mandatory penalty under Section 11AC of the Central Excise Act, 1944 by the Tribunal despite confirming duty on account of clandestine removal and evasion of Central Excise duty.

Analysis:
1. The Commissioner of Central Excise & Customs filed a Tax Appeal questioning the Tribunal's decision to reduce the penalty imposed on the respondent-assessee under Section 11AC of the Central Excise Act, 1944. The key issue was whether the Tribunal was justified in reducing the penalty to 25% despite confirming duty evasion by the respondent.

2. The Appellant argued that the respondent did not meet the preconditions for availing the benefit of reduced penalty under Section 11AC. The Appellant cited various cases to support their argument, emphasizing the need for the Tribunal to allow the department to levy penalty equivalent to the duty liability.

3. The Appellant further contended that the Tribunal's order was not in line with the law established by previous judgments, requiring the Tribunal to provide cogent reasons for its decisions. They referenced several cases to support this argument.

4. The High Court analyzed the submissions and previous judgments. It noted that the issues raised by the Appellant had been addressed in earlier cases, where the Court upheld the Tribunal's decision to retain the penalty at 25% of the duty amount. The Court found no reason to deviate from this view in the present appeal.

5. The Court acknowledged the Appellant's additional submissions regarding the respondent's non-compliance with the preconditions for reduced penalty and the adjudicating authority's obligation to mention the benefit of reduced penalty in its order. The Court referred to a Circular issued by the Central Excise Department, emphasizing the requirement for the adjudicating authority to specify the provisions of Section 11AC in the order-in-original.

6. In conclusion, the Court dismissed the Tax Appeal but provided clarification on the respondent's obligation to pay interest and reduced penalty within 30 days of determination. The Court directed the adjudicating authority to communicate this requirement to the respondent, ensuring compliance with the statutory provisions.

7. The Court observed that the Tribunal's order was reasoned and not non-speaking, as claimed by the Appellant. The Court upheld the Tribunal's decision, noting its consistent approach in cases where duty was paid before the issuance of a show cause notice, resulting in a penalty reduction to 25% of the duty amount.

8. The Court's final decision was to dismiss the Tax Appeal, subject to the clarification provided regarding the respondent's obligation to pay interest and reduced penalty within the specified timeframe.