2013 (1) TMI 74 - AT - Central Excise

Demand u/s 11D - Levy of penalty u/s 11AC - Charge and collect excise duty without being registered with department - Suppression of facts - Collection of excise duty and not deposit with department - Appellants have paid the entire amount of duty along with interest before adjudication - Held that - Extent demand has been made only of Rs.69,281/- u/s 11A(1). Rest of the demand has been confirmed u/s 11D. There is no provision either in the Act or in the Rule for imposing of penalty, where demand has been paid u/s 11D. Therefore, penalty can be imposed only on the demand of Rs.69,281/- or u/s 11A(1). Therefore, penalty is restricted to 25% of Rs.69,281/- which is payable by them within 30 days of the communication of this order. In favour of assessee

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
2. Challenge to the levy of penalty in the appeal.
3. Provision for penalty under Section 11D of the Central Excise Act, 1944.
4. Contention regarding suppression of facts by the appellants.
5. Determination of penalty amount and payment terms.

Analysis:
1. The judgment dealt with the imposition of a penalty of Rs.6,80,569/- on the appellants under Section 11AC of the Central Excise Act, 1944. The case involved the appellants importing certain material without Central Excise Registration, later clearing them in the local market by charging Central Excise duty from customers. The appellants collected Rs.6,80,569/- as excise duty but failed to deposit it with the department, leading to the imposition of penalties and demands under various sections of the Act.

2. The appellants challenged the levy of penalty, arguing that there is no provision in the Central Excise Act for imposing penalties on demands confirmed under Section 11D. The consultant relied on a previous decision to support this claim. The department contended that the penalty was justified as the appellants had suppressed the fact of collecting excise duty, which was not paid to the department.

3. Upon hearing both sides, the judge acknowledged the suppression of facts by the appellants but noted that penalties can only be imposed on demands made under Section 11A(1) of the Act, not under Section 11D. As the appellants had paid the entire duty amount along with interest before adjudication, the penalty was restricted to 25% of Rs.69,281/-. The appellants were given 30 days to pay the reduced penalty, failing which the full penalty amount would be due.

4. The judgment clarified that there is no provision in the Act or Rules for imposing penalties on demands confirmed under Section 11D. The penalty was, therefore, limited to the demand made under Section 11A(1) of the Central Excise Act, 1944. The appellants' payment of the entire duty amount and interest before adjudication influenced the determination of the penalty amount.

5. In conclusion, the appellants' appeal was disposed of with the terms set for the payment of the reduced penalty amount. Failure to comply with the payment terms would result in the appellants being liable to pay the full penalty amount. The judgment provided a clear ruling on the imposition and calculation of penalties under the Central Excise Act, 1944, based on the specific provisions of the law.

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