Tribunal upholds penalty on tap-off station despite prompt duty payment

The tribunal upheld the imposition of a penalty under Section 11AC of the Central Excise Act on the appellant, a tap-off-the-point station, despite their prompt payment of duty upon realizing the error. The penalty was reduced to Rs. 15,00,000, already deposited by the appellant, taking into account their status as a Public Sector Undertaking. The tribunal found the appellant liable for the penalty due to the significant period during which duty was not paid until investigations prompted compliance, rejecting the appeal on other grounds.

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Issues:
Imposition of personal penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
The appellant did not challenge the confirmation of duty amount but contested the imposition of a personal penalty of the same amount under Section 11AC. The appellant, a new tap-off-the-point station, claimed lack of awareness of central excise formalities as the reason for the mistake in not paying duty on indigenous products cleared from the depot. The appellant promptly paid the duty upon realizing the error.

Analysis:
The respondent argued that despite being an old assessee, the appellant cleared final products without paying duty over a significant period until investigations by the DRI prompted them to start paying duty. The respondent contended that the appellant's claim of paying the duty before the show cause notice to avoid penalty was unacceptable. The respondent sought confirmation of the penalty amount.

Analysis:
Upon careful consideration, the tribunal acknowledged the appellant's lapse in not paying duty until prompted by the Revenue. Despite the appellant being a Public Sector Undertaking and depositing the entire duty amount before the show cause notice, the tribunal found them liable for a penalty. The tribunal reduced the penalty to Rs. 15,00,000, already deposited by the appellant, considering their status but rejected the appeal on other grounds.

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