2025 (3) TMI 187 - AT - Central Excise

Reduction of penalty under Section 11AC of CEA - duty and interest not paid within 30 days from the date of communication of the order of the Central Excise officer - interest under Section 35FF of the Act for delayed refund of the amount deposited - HELD THAT - The proviso to Section 11AC of the Act is clear. The reduction of penalty to 25% will apply only in those cases where the amount of duty determined by the Central Excise officer along with interest is deposited within 30 days from the date of communication of the order of the Central Excise officer. There is no reference to order of an appellate authority such as Commissioner (Appeals) Tribunal or High Court or Supreme Court. As the appellant had not fulfilled the conditions of this proviso he was not entitled to the benefit of reduced penalty. Therefore the Assistant Commissioner was correct in calculating the penalty as equal to 100% of the duty under Section 11AC of the Act and consequently reducing the amount of refund. Interest as applicable under Section 35FF of the Act - HELD THAT - It is clear from section 35FF that where an amount of duty deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority or tribunal and such amount is not refunded within three months from the date of communication of such order interest has to be paid. In this case the order of the Tribunal is dated 29.01.2019 but the appellant had communicated the copy of this order to the officer and sought refund only on 01.07.2022. There is nothing on record to show that the Final Order of this Tribunal was communicated to the Assistant Commissioner through any other means. The Assistant Commissioner passed the order on 05.08.2022 i.e. within less than two months of the application. Conclusion - i) Assistant Commissioner was correct in calculating the penalty as equal to 100% of the duty under Section 11AC of the Act. ii) The appellant was not entitled to interest under Section 35FF due to the delay in seeking the refund. The appeal is rejected and the impugned order is upheld.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the appellant is entitled to a reduced penalty under Section 11AC of the Central Excise Act, 1944 for not paying the duty and interest within 30 days from the date of communication of the order of the Central Excise officer.2. Whether the appellant is entitled to interest under Section 35FF of the Act for delayed refund of the amount deposited.Issue 1: Reduced Penalty under Section 11AC of the Central Excise Act, 1944- Relevant legal framework and precedents: Section 11AC of the Central Excise Act, 1944 provides for a penalty equal to the amount of duty to be paid. However, there is a proviso that allows for a reduction to 25% of the duty if the duty and interest are paid within 30 days from the date of communication of the order of the Central Excise officer.- Court's interpretation and reasoning: The Court interpreted the proviso to Section 11AC and concluded that the reduction of penalty to 25% only applies if the duty and interest are paid within the specified timeframe.- Key evidence and findings: The appellant did not pay the duty and interest within 30 days as required by the proviso.- Application of law to facts: As the appellant did not fulfill the conditions of the proviso, the Court held that the Assistant Commissioner was correct in calculating the penalty as 100% of the duty.- Conclusions: The appellant was not entitled to the benefit of the reduced penalty under Section 11AC, and the penalty was correctly calculated at 100% of the duty.Issue 2: Entitlement to Interest under Section 35FF of the Act- Relevant legal framework and precedents: Section 35FF of the Act provides for interest on delayed refund of the amount deposited under the proviso to Section 35F.- Court's interpretation and reasoning: The Court analyzed Section 35FF and determined that interest is payable if the amount deposited is required to be refunded within three months from the date of communication of the order of the appellate authority.- Key evidence and findings: The appellant sought refund of the amount deposited after a significant delay from the date of the Tribunal's order.- Application of law to facts: The Court found that the appellant did not communicate the Tribunal's order to the Assistant Commissioner in a timely manner, and therefore, interest was not applicable.- Conclusions: The appellant was not entitled to interest under Section 35FF due to the delay in seeking the refund.Significant Holdings:- The Court upheld the impugned order and rejected the appeal, concluding that the appellant was not entitled to a reduced penalty under Section 11AC or interest under Section 35FF.In summary, the Court analyzed the appellant's entitlement to a reduced penalty under Section 11AC of the Central Excise Act, 1944, and interest under Section 35FF. The Court found that the appellant did not meet the requirements for a reduced penalty or interest, leading to the rejection of the appeal and upholding of the impugned order.