2005 (12) TMI 122

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..... officers of Central Excise found that, during the period 1-4-1997 to 28-8-1997, the appellants' reeling machine was in disuse and hence cotton yarn in hank could not have been manufactured and cleared during the said period. It appeared to the Department that, during the above period, the appellants were manufacturing and clearing cotton yarn on cones, which was dutiable unlike hank yarn. It was .....

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..... examining the records and hearing both sides, I find that there is no sustainable challenge against the demand of duty. The stress, in the Memo of Appeal, is on penalty. Ld. Counsel for the appellants has argued that, in view of payment of nearly one-third of the amount of duty prior to issuance of the show cause notice, the lower authorities ought not to have imposed the maximum penalty on the as .....

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..... issuance of the show cause notice, there would have been no penalty on the assessee under Section 11AC. It would follow that any amount paid towards demand of duty prior to the issuance of the show cause notice should be considered for deduction in the quantification of penalty under Section 11AC. Applying this principle, I reduce the quantum of penalty to Rs. 1,10,814/- (Rupees One Lakh Ten Thous .....

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