2014 (4) TMI 15 - HC - Central Excise

Jurisdiction of Tribunal - Reduction of penalty - Penalty u/s 11AC - Whether the appellate Tribunal on the facts and circumstances of the case could reduce the penalty amount, which is less than the amount of penalty specified under section 11 AC of the Central Excise Act, 1944 - Held that - quantum of the penalty equal to the duty determined as contemplated by Section 11AC is mandatory and there is no discretion in the adjudicating authority or the Tribunal to impose different amount of penalty. In a case where penalty is leviable under section 11AC on fulfilment of the conditions as enumerated in Section 11AC, the penalty equal to the amount of duty determined is mandatory and there is no discretion in the Tribunal to reduce the said penalty - penalty under section 11AC can be imposed only when conditions mentioned in Section 11AC exist. The authorities have no discretion in fixing the quantum of penalty and penalty equal to the duty must be imposed once section 11Ac is made applicable - Decided in favour of Revenue.

Summary

Issues:
1. Whether the Tribunal can impose a penalty less than the duty not paid when the assessee is found guilty of suppression of facts.

Analysis:
The judgment pertains to an appeal under Section 35-G of the Central Excise Act, 1944 against a decision of the Customs, Excise & Service Tax Appellate Tribunal. The key question raised was whether the Tribunal can impose a penalty less than the duty not paid when the assessee is found guilty of suppression of facts. The appellant argued that a Division Bench judgment of the Court in a similar case supported their position. The Division Bench, after considering various High Court judgments, concluded that under Section 11AC, the penalty equal to the duty determined is mandatory, and there is no discretion to impose a different amount of penalty. The Tribunal cannot reduce the penalty amount below what is specified under Section 11AC. The apex Court's ruling in Union of India Vs. Rajasthan Spinning and Weaving Mills was cited to emphasize that the penalty under Section 11AC must be imposed when the conditions mentioned therein exist, and the authorities have no discretion in fixing the penalty amount.

The judgment explicitly states that the Tribunal has no discretion to reduce the penalty amount specified under Section 11AC of the Central Excise Act. The decision was in favor of the revenue, emphasizing the mandatory nature of the penalty equal to the duty determined. The appeal was allowed, and each party was directed to bear their own costs. The counsel for the assessee acknowledged that the question raised in the appeal had already been answered in favor of the Department in a previous judgment. Consequently, the appeal was allowed, and the questions of law were answered in favor of the Department and against the assessee.