2015 (5) TMI 167 - AT - Central Excise

Rectification of mistake - Penalty u/s 11AC - Clandestine removal of goods - Held that - Member (Judicial) has not given any contrary findings as to the confirmation of demand of ₹ 1,55,105/- in respect of clandestine clearance of Terpene by the appellant or to the imposition of penalty of equivalent amount on the appellant. The said demand has been confirmed under the first proviso to Section 11A (1) of the Central Excise Act, 1944, that is, alleging suppression, wilful mis-statement of facts, etc. with an intent to evade duty. Once the demand is confirmed invoking the said proviso, imposition of penalty under Section 11AC is mandatory and automatic. Further in the summing up portion, the learned Member (Judicial) has clearly agreed that the duty demand of ₹ 1,55,105/- for clearance of Terpene clandestinely is sustainable. If that be so, in the absence of a contrary decision by the Hon ble Member (Judicial), it cannot be said that he has waived the penalty of equivalent amount on the appellant, which is a mandatory provision. - Rectification denied.

Summary

Issues:
Rectification of mistake regarding penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The appellant sought rectification of a mistake in the final order passed by the Tribunal, specifically concerning the imposition of a penalty of Rs. 1,55,105 under Section 11AC. The appellant argued that the penalty was erroneously upheld as the adjudicating authority did not impose any penalty in the original order. However, upon review, it was found that the adjudicating authority had indeed confirmed the penalty in relation to the clandestine clearance of Terpene. The penalty was part of the total demands confirmed, which included Cenvat credit recovery and Central Excise duty. The Tribunal noted that the appellant's contention regarding the absence of penalty imposition by the adjudicating authority was incorrect.

Regarding the disagreement between the Hon'ble Member (Judicial) and Hon'ble Member (Technical) on the imposition of penalty under Section 11AC, it was clarified that the Hon'ble Member (Judicial) did not dispute the confirmation of the duty demand for the clandestine clearance of Terpene. As per the first proviso to Section 11A(1) of the Central Excise Act, when duty demand is confirmed due to suppression or misstatement, the penalty under Section 11AC becomes mandatory. The Tribunal emphasized that since the duty demand for Terpene clearance was upheld, the imposition of an equivalent penalty was warranted. The Tribunal concluded that there was no merit in the rectification application and dismissed it for lacking substance.

In summary, the Tribunal rejected the rectification application concerning the penalty under Section 11AC, as it was confirmed by the adjudicating authority and deemed mandatory due to the duty demand for clandestine clearance of Terpene being sustained. The disagreement between the Tribunal members did not affect the imposition of the penalty, as the duty demand's confirmation automatically triggered the penalty provision under the law.