2021 (12) TMI 954 - AT - Central Excise

Entitlement to reduced penalty - total amount deposited at the time of investigation is much more than the confirmed duty demand, interest thereon and 25% penalty - Department's contention is that since the appellant have not opted for reduced penalty in writing therefore, 100% penalty will remain payable and accordingly the refund was supposed to be reduced by the amount of 100% penalty instead of 25% penalty - HELD THAT - The Adjudicating authority while sanctioning the refund even though the appellant informed not to deduct the penalty as they are contesting the matter before the appellate authority, sanction the refund from the amount after deducting the confirmed duty, interest and 25% penalty. The amount deducted by the Assistant Commissioner was deposited and retained by the department right from the day it was deposited till the refund was sanctioned. Therefore, at the time of passing the adjudication order on demand case and even up to the 30 days from the date of such order the amount of confirmed duty, interest thereon and 25% penalty stands deposited with the department. Therefore, there is no reason to deny the benefit of a reduced penalty of 25% to the appellant even though the appellant had not opted but the fact remains that the amount remains very much with the department and the appellant s request of deducting 100% penalty was not exceeded by the department that itself shows that the department has retained the amount of confirmed duty, interest thereon and 25% penalty not only within a period of 30 days from the date of the said order but much before than therefore, the compliance of the Section 11AC(1) (e) stands complied with . Therefore, the appellant was entitled for a 25% reduced penalty. The Adjudicating authority s order granting refund after reducing the confirmed demand, interest thereon and 25% penalty out of total deposit of ₹ 2.35 Crores is absolutely correct and legal - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to reduced penalty of 25% under Section 11AC (1) (e) of Central Excise Act, 1944.

Analysis:
The case involved a dispute regarding the entitlement to a reduced penalty of 25% under Section 11AC (1) (e) of the Central Excise Act, 1944. The appellant had paid an amount during investigation, and subsequently, a refund claim was filed. The Revenue contested the refund claim based on the imposition of a penalty in the original order. The appellant argued that they had already deposited an amount that covered the confirmed demand, interest, and 25% penalty. The Revenue contended that since the appellant did not opt for the reduced penalty in writing, the full penalty was payable. The Adjudicating authority had sanctioned the refund after deducting the confirmed duty, interest, and 25% penalty. The appellant's request to deduct 100% penalty was not accepted, indicating that the department had retained the necessary amount. The Adjudicating authority's decision to grant the refund after reducing the penalty from the total deposit was deemed correct and legal.

In conclusion, the Tribunal found that the appellant was entitled to the reduced penalty of 25% as the amount deposited during investigation covered the confirmed demand, interest, and 25% penalty. The impugned order was set aside, and the appeal was allowed with consequential relief.