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TMI Blog2009 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... cate for the respondent. [Judgment per :M.M.KUMAR, J.] - This is an appeal by the revenue filed under Section 35 G of the Central Excise Act,1944 (for brevity 'the Act') challenging order dated 10.1.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for brevity 'the Tribunal'). The revenue has claimed that the following question of law would emerge from the said order of the Tribunal: " Whether CESTAT is correct in allowing the benefit of penalty upto 25% of the duty amount in the case when the penalty so determined was not paid by the party within the period of thirty days which is the pre requirement to avail such benefit as per the second proviso to Section 11 AC.?" Brief facts of the case which are necessary for the disposal of the controversy raised may first be noticed. The dealer- respondent M/s J.R. Fabrics (P) ltd. is engaged in the manufacture of unprocessed woven fabrics, chenille fabrics and pile fabrics falling under Chapter 54, 55 and 58 of the Central Excise Tariff Act,1985.The dealer- respondent was registered with the central excise department and was availing CENVAT credit facility. It is conceded position that dealer- resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent company so as to attract the penalty of Rs. 1,00,000/- under Rule 26 of the Central Excise (Part 2) Rules, 2001 or which could prove that he had made some personal gain out of the Chenille fabrics which was the good in question. Thereafter the dealer- respondent further preferred an appeal before the Tribunal. The Tribunal has held that the dealer- respondent was liable to pay only 25 percent of duty amount as penalty by placing reliance on a judgement of the Delhi High Court in the case of CCE v. Malbro Appliances Private Ltd. 2007(208) ELT 503. The view of the Tribunal reads thus: ".......... I find that it is clear case of suppression of fact with intent to evade payment of duty and Section 11 AC would be invoked in this case. The Hon'ble Delhi High Court in the case of Malbro Appliances Pvt. Ltd. (supra) held that the assessee paid duty before issue of show cause notice; the Tribunal rightly worked out penalty amount to close to 25% of the duty determined. Respectfully following the decision of the Hon'ble High Court, penalty is reduced to Rs. 1,27,000/- i.e. 25% of the duty amount as the respondent deposited duty before issue of show cause notice. The appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty, the persons who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined: [Provided that where such duty as determined under sub section (2) of section 11 A, and the interest payable thereon under section 11 AB , 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 days referred to in that proviso: Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, if the duty as determined under Section 11 A(2) of the Act by the Central Excise Officer is paid within thirty days then penalty equal to the amount of duty is not required to be paid and the amount contemplated in lieu of the penalty is 25 % of the total amount of excise duty determined the officer concerned. It would further be necessary to notice that 3 rd proviso takes care of a situation where duty determined to be payable is reduced or increased by the Commissioner (appeals), Appellate Tribunal or by this Court then duty as reduced or increased is required to be taken into account. The provision takes care of fluctuation in the assessment of duty at the appellate stage. However, in the present case there is no increase or decrease in the assessment of duty of excise. The alteration has been ordered by the Tribunal in the order of the Commissioner ( Appeals) by reducing the amount of penalty to 25% of the total amount of duty of excise assessed by the Assessing Authority. Therefore, we are of the view that the appeal filed by the Revenue is liable to be rejected. It is appropriate to notice that the period in question is 28.7.2001 to 28.2.2002 and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of duty has been deposited before the issuance of show cause notice that imposition of penalty becomes illegal or lenient view was required to be taken. The view taken by the Delhi High Court in Malbro Appliances Private Ltd.'s case (supra) was also examined in detail by a Division Bench of the same Court in the case of K.P.Pouches (P) Ltd v. Union of India 2008 (228) ELT 31. After reading Section 11 AC of the Act, the Division Bench came to the conclusion that according to the proviso only 25% of the duty of excise was payable. The facts of the present case are akin to the facts of the Division Bench judgement in K.P.Pouches (P) Ltd. case (supra). It has been held by the Division Bench that when the statutory authorities are acting illegally and contrary to the 1 st proviso to Section 11 AC of the Act and therefore the assessee cannot be faulted to challenge the order passed by the Assistant Commissioner which fault was also repeated by the Commissioner (Appeals). The situation is the same in the present case. We, therefore, respectfully agreeing with the view taken by the Division Bench in K.P. Pouches (P) Ltd.'s case (supra) hold that the conclusion reached by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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