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TMI Blog2010 (5) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... led present Appeal under Section 35G of the Central Excise Act (for brevity 'the Act') against the Order dated 19.10.2005 passed by Customs, Excise and Service Tax Appellate Authority, New Delhi. The Revenue has sought to raise the following substantial Question of Law:- "Whether the penalty under Section 11AC of the Central Excise Act is mandatory and equal to the duty demanded or the authority has discretion to impose lesser penalty". Earlier this appeal had come up for hearing before a Division Bench which vide its order dated 25.1.2007 dismissed the appeal and held that the penalty under Section 11AC of the Central Excise Act,1944 is mandatory where the intention to evade tax is established. However, as the counsel for Revenue had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 44,54,032/-. The demand was raised on following four counts: i Rs. 77,294/- on the ground of parallel invoice. ii Rs. 28,35,558/- on the ground of Out going Gate Passes (OGP). iii Rs. 15,27,773/- as the ground that the value on which duty paid was incorrect inasmuch as the duty was paid on the ex-factory price instead of the depot price. iv Rs. 13,407/- on the ground of free samples given to farmers. The Adjudicating Authority confirmed the whole amount of duty and imposed equal amount of penalty under Section 11 AC of the Central Excise Act. While dealing with the demand raised on the count that goods have been cleared without invoices but under OGP, the Adjudicating Authority found that department has brought on record the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand of Rs. 13,407/- purely relates to legal issues. The demand of these counts is purely relating to legal issue and has no bearing with clearance with malafide intention. The Counsel also contended that as per Ld. Adjudicating Authority also only in case of 60% OGP, there is evidence of clearance without payment of duty. There was procedural lapse in respect of 40% OGP. So demand even though confirmed in respect of those gate passes, penalty cannot be imposed. He relied upon judgment of Hon'ble Supreme Court in the case of Union of India vs. Rajasthan Spinning and Weaving Mills, 2009 (238) ELT 3 (S.C). We have considered arguments of both the learned counsels and perused the record. At the outset, we noticed that the present case is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n though it may be mandatory. For procedural lapse, penalty cannot be imposed much less penalty under Section 11AC of the Act. The Tribunal has imposed penalty of Rs. 20.00 Lac which if demand raised on account of legal issues and procedural lapse is reduced, comes to more than the duty demanded. As Assessee has not come in Appeal, question of levy of penalty whether excess or not cannot be examined. In view of the factual matrix, we are of the considered opinion that Revenue has failed to establish the required ingredients of Section 11AC. The Tribunal has rightly reduced the amount of penalty from equal amount of duty to Rs. 20.00 Lacs. The question posed is answered against the Revenue and in favour of the assessee. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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