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TMI Blog2008 (1) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... Application No. 447/2005 SM(BR) respectively. 2. After hearing learned counsel for the parties, we admit this appeal and frame the following substantial question of law for consideration: - "Whether the Customs, Excise and Service Tax Appellate Tribunal was correct in law in upholding the imposition of 100% penalty on the Assessee in terms of Section 11 AC of the Central Excise Act, 1944?" 3. Filing of paper books is dispensed with. 4. The broad facts of the case are that the Assessee is a manufacturer of Ghutka. On 16th September, 2003, two tempos carrying Ghutka were intercepted by the Excise Authorities and on an enquiry from the tempo staff, they reached the factory premises of the Assessee. 5. One Mahesh Kumar, who is an employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excess of 25% could not have been' levied since the entire duty was paid by the Assessee on the date of the search and seizure, which was of course well before the date of the show cause notice. 11. Feeling aggrieved by the imposition of 100% penalty, the Assessee preferred an appeal before the Commissioner (Appeals) who passed an order dated 31st March, 2005 rejecting the contention of the Assessee. 12. Thereafter, the Assessee preferred an appeal before the Tribunal and the Tribunal also dismissed the appeal of the Assessee. 13. The Assessee then preferred a miscellaneous application before the Tribunal wherein it was pointed out that the Assessee had already paid the en tire duty well before the date of the show cause notice. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section be twenty-five percent of the duty so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty day referred to in that proviso: Provided also that xxx xxx xxx Provided also that xxx xxx xxx" 17. We are of the opinion that Section 11AC of the Act and its two provisos have to be given a meaningful interpretation. The purpose of the Section and the provisos is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by way of penalty (as he should have), the Assessee would not have paid the penalty amount within 30 days of the adjudication order. However, the benefit of doubt in this regard must go to the Assessee considering its bona fides, which are obvious from the fact that the Assessee debited the duty amount on the date of the search, well before a show cause notice was issued to it. Under these circumstances, we can only infer that if the correct penalty had been imposed upon the Assessee, he would have paid it within the time prescribed. 22. The fact that the Assistant Commissioner levied an incorrect penalty left the Assessee with no option but to challenge it otherwise he would have had to pay the full penalty amount, which is statutorily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as adjudicated by the Tribunal. 26. The question of law is, therefore, answered in the negative, in favour of the Assessee and against the Revenue. The appeal is disposed of accordingly. 27. To obviate any similar situation from arising in future, we are of the opinion that in its adjudication order the adjudicating authority under the Act should explicitly state the options available to the Assessee under Section 11AC of the Act. Once the choices are made known to the Assessee and it still does not take advantage of the first proviso to Section 11AC of the Act, it will be entirely at its own peril. Therefore, it would be beneficial, both from the point of view of the Revenue as well as the Assessee, if the options available to the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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