2019 (3) TMI 1044 - AT - Central Excise

Penalty u/s 11AC - SSI Exemption - threshold limit crossed - on the value exceeding the SSI exemption limit, duty was not discharged - Held that - there is no dispute for the reason that SSI exemption value has been exceeded by the appellant. Accordingly, on the value exceeding the SSI exemption limit, the appellant is liable for excise duty. Quantum of penalty - Held that - The fact about exceeding the value of exemption limit has not been disclosed by the appellant. Moreover, the duty demand was confirmed invoking proviso to Section 11A(1) - It is settled law, as the Hon ble Supreme Court decision in the case of Dharmendra Textiles Processors 2008 (9) TMI 52 - SUPREME COURT that penalty imposed under Section 11AC cannot be reduced being the mandatory penalty - thus only on the ground that duty was paid before issue of show cause notice, penalty imposed under Section 11AC cannot be reduced or waived. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Appellant crossed SSI exemption limit but did not discharge duty; Adjudicating Authority demanded duty, redemption fine, penalty, and interest; Appeal against penalty imposition under Section 11AC.

Analysis:

Issue 1: Appellant crossed SSI exemption limit but did not discharge duty
The appellant in this case crossed the SSI exemption limit, but failed to discharge the duty on the value exceeding the exemption limit. The Adjudicating Authority demanded duty, along with redemption fine, penalty, and interest, which was upheld by the Commissioner (Appeals), leading to the present appeal.

Issue 2: Appeal against penalty imposition under Section 11AC
The appellant did not dispute the demand for duty, but sought waiver of penalty since the duty was paid before the issue of the show cause notice. The Revenue, represented by the Superintendent (AR), argued that the penalty imposed under Section 11AC could not be waived or reduced as the demand was raised under the proviso of Section 11A(1). The Revenue relied on various judgments to support their position.

Judgment and Decision
After considering the submissions from both sides, the Tribunal found that there was no dispute regarding the appellant exceeding the SSI exemption limit and being liable for excise duty on the value exceeding the limit. The Tribunal noted that the appellant did not disclose the fact of exceeding the exemption limit, and the duty demand was confirmed under the proviso to Section 11A(1), leading to the imposition of penalty under Section 11AC. Citing the Supreme Court decision in the case of Dharmendra Textiles Processors, the Tribunal held that the penalty under Section 11AC was mandatory and could not be reduced or waived, even if the duty was paid before the show cause notice was issued. Consequently, the impugned order was upheld, and the appeal was dismissed.

This judgment underscores the importance of compliance with duty payment obligations, even when the duty is paid after the violation has occurred. It establishes that penalties imposed under specific sections of the law, such as Section 11AC, are mandatory and cannot be waived or reduced based on the timing of duty payment relative to the issuance of show cause notices.