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2017 (4) TMI 34 - HC - Central ExciseWhether the appellant was entitled to the benefit of payment of only 25% of the penalty? - Held that - the appellant not having complied with the conditions precedent of the first proviso, namely, the payment of the duty and interest determined under section 11A(2) and Section 11AB, respectively, within 30 days of the communication of the order of the adjudicating authority. The first Proviso not having been complied with, the appellant is not entitled to the benefit of the second Proviso. Thus, the appellant is not entitled to the benefit of the reduced duty - decided against appellant. Whether an assessee is liable to pay penalty only to the extent of the balance unpaid amount of the duty determined under section 11A(2) of the Act? - Held that - The injustice caused by a wrong determination is righted by the third proviso under which the reduced duty determined to be payable is to be taken into account for the purpose of section 11AC which would also include the first proviso. Fairness, therefore, is established. No prejudice, therefore, is caused to the assessee. If the assessee wishes to speculate as to the outcome of the further proceedings, he must do so at his own risk - the concession granted under the first proviso to section 11AC is to a person who has been guilty of fraud, collusion, etc. - we are not inclined to take the view in favour of the assessee in a case under section 11AC for it involves an assessee who has been found guilty of fraud, collusion, etc. - decided against appellant. Appeal dismissed - decided against appellant.
Issues Involved:
1. Whether the appellant was entitled to the benefit of payment of only 25% of the penalty. 2. Whether an assessee is liable to pay penalty only to the extent of the balance unpaid amount of the duty determined under section 11A(2) of the Central Excise Act, 1944. Issue-wise Detailed Analysis: Re: Question No.1: The imposition of duty is not contested by the appellant. The primary question is whether the appellant is liable to pay the entire penalty or only the penalty on the balance unpaid amount of the duty of excise. Despite the appellant's contention of paying ?5,22,759/- on 04.07.2008 as per the respondent's instructions, the adjudicating authority confirmed the duty amounting to ?6,00,247/- on 02.03.2010. The appellant deposited the balance duty of ?77,498/- on 16.09.2010, beyond the 30-day period from the date of the original order. Under section 11AC, the appellant was liable to pay the duty and a penalty equal to the duty determined. The first proviso of section 11AC allows a reduced penalty of 25% of the duty if the duty and interest are paid within 30 days from the communication of the order. The appellant paid the balance duty beyond this period, making the first proviso inapplicable. The second proviso, as interpreted in the case of Commissioner of Central Excise, Rohtak vs. J.R. Fabrics (P) Ltd., 2009(238) E.L.T. 209 (P&H), does not assist the appellant due to non-compliance with the first proviso. Consequently, the appellant is not entitled to the benefit of reduced duty. Thus, Question No.1 is answered in favor of the respondent and against the appellant. Re: Question No.2:This issue was not raised before the Tribunal but is considered as a substantial question of law by the High Court. The appellant argued that the penalty should only apply to the unpaid balance of the duty determined under section 11A(2), which in this case is ?77,498/-. Section 11A allows the Central Excise Officer to determine the amount of duty due after considering the representation by the person served with notice. Section 11AC stipulates that the penalty is equal to the duty determined under section 11A(2). The first proviso to section 11AC reduces the penalty to 25% of the duty if the duty and interest are paid within 30 days of the order's communication. The language of the first proviso indicates that the reduced penalty applies only if the entire duty and interest are paid within the stipulated period, not just a part. The third proviso clarifies that the duty determined by the final order (whether by the Commissioner (Appeals), the Appellate Tribunal, or the Court) is to be considered for section 11AC purposes. This supports the view that the first proviso requires payment of the entire duty and interest for the reduced penalty benefit. The first proviso provides an incentive for prompt payment of the entire duty and interest, ensuring efficient recovery for the Revenue. The incentive is not intended for partial payments, which would undermine the purpose of the provision. Considering the legislative intent and the specific treatment of cases involving fraud, collusion, etc., the first proviso's concession is conditional on full payment within the stipulated period. Even if another interpretation is possible, the court is not inclined to favor the appellant, given the context of section 11AC involving fraud, collusion, etc. Thus, Question No.2 is also answered against the appellant and in favor of the Revenue. Conclusion:In conclusion, the appeal is dismissed, with both substantial questions of law answered against the appellant and in favor of the respondent.
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