Reduced penalty under Section 11AC operates independently of pre-deposit, with appellate relief possible under its own provisos.

Reduced penalty under the first proviso to Section 11AC of the Central Excise Act is governed by its own conditions and does not depend on the pre-deposit regime under Section 35F. The 25% penalty option applies where duty, interest and reduced penalty are paid within thirty days of communication of the order determining duty, and the appellate order is relevant only to the extent the provisos specifically permit. Where the statutory option was not properly afforded at adjudication, appellate relief may be sustained consistently with Section 11AC. The commentary treats these provisions as operating in different fields and explains that the reduced-penalty benefit is not linked to pre-deposit requirements.

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Issues: Whether the benefit of reduced penalty under the first proviso to Section 11AC of the Central Excise Act, 1944 could be extended from the date of communication of the appellate order, and whether the Commissioner (Appeals) was justified in linking that benefit with the requirement of pre-deposit under Section 35F.

Analysis: The demand of duty was upheld on the basis of clandestine removal, thereby attracting mandatory penalty under Section 11AC. The first proviso to that section allows reduction of penalty to 25% if the duty, interest, and reduced penalty are paid within thirty days of communication of the order determining duty under Section 11A(2). The subsequent provisos indicate that where duty is reduced or increased in appeal, the appellate order is relevant only to the extent specifically provided. The two provisions, Section 11AC and Section 35F, operate in different fields, and the reduced-penalty benefit does not depend on the pre-deposit regime. In the peculiar facts, the adjudicating authority had not properly afforded the statutory option, and the appellate authority's grant of thirty days from its own order was therefore upheld.

Conclusion: The assessee was entitled to the option of paying 25% penalty within thirty days of the appellate order as granted by the Commissioner (Appeals), and the Revenue's challenge failed.

Final Conclusion: The impugned relief in respect of reduced penalty was sustained, and the Revenue obtained no effective interference with the order under challenge.

Ratio Decidendi: The reduced-penalty benefit under Section 11AC is governed by its own provisos and, where the statutory option was not properly given at adjudication, the appellate authority may sustain relief consistent with those provisos without resort to Section 35F.

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