2015 (12) TMI 805 - HC - Central Excise

Penalty u/s 11AC - Invocation of extended period of limitation - Held that - Actual tax amount itself required to be re-determined as the matter has been remanded back to the adjudicating authority. In other words, the very tax demand itself is likely to workout to meager amount - what all the Tribunal has done is given a direction to the adjudicating authority in view of the facts of the case to take into consideration and limit the penalty not to exceed 10% of the tax demand. In such circumstances, we do not find any infirmity with the order of the Tribunal and we may also notice the very question raised in the present case would become academic in view of the fact that Section 11AC came to be substituted by Finance Act, 2011 with entirely new provisions where different rates of penalties have been prescribed. - Decided against Revenue.

Summary

Issues:
Appeals arising from CESTAT order on excise duty liability, penalty under Section 11AC, and Rule 173Q and Rule 209A of Central Excise Rules.

Analysis:
The respondent, engaged in interior decoration and furniture supply, faced excise duty demands and penalties for certain transactions. The adjudicating authority found some transactions not liable for excise duty but imposed duty and penalties on others. The CESTAT, after detailed analysis, remanded the case for re-determination of taxable transactions, limiting penalties to not exceed 10%. The Department appealed questioning CESTAT's power to reduce mandatory penalties under Section 11AC based on Supreme Court precedent. The Tribunal's direction to limit penalties was found reasonable given the circumstances and the impending changes in penalty provisions under the Finance Act, 2011.

The Tribunal's decision was based on the discretion provided by the 3rd proviso to the amended Section 11AC, allowing penalties to be limited. The Tribunal directed the adjudicating authority to consider the case facts and cap penalties at 10% of the tax demand. The judgment highlighted the impending irrelevance of the issue raised due to the substitution of Section 11AC by the Finance Act, 2011, which introduced new penalty provisions with different rates.

In conclusion, the appeals were dismissed, and any related petitions were closed without costs. The judgment emphasized the evolving penalty provisions under the Finance Act, 2011, rendering the raised issue academic and supporting the Tribunal's decision to limit penalties based on the circumstances of the case.