Reduced penalty under Central Excise law may remain available where the statutory option was not clearly communicated earlier.

The Gujarat High Court discussion concerns reduced penalty under the proviso to section 11AC of the Central Excise Act, 1944, where the assessee was to be given the option to pay 25% of the penalty within 30 days even though the duty amount was not re-determined in appeal. It notes that earlier decisions had already accepted extension of the proviso in appropriate cases and that the Department's circular required the adjudicating authority to mention the reduced-penalty option in the order-in-original. The article also records that, where duty had been paid and the communication on interest and reduced penalty was not made clear earlier, denial of the benefit would be unjust.

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Issues: Whether the Tribunal was justified in extending the benefit of reduced penalty under the proviso to section 11AC of the Central Excise Act, 1944 by granting an option to deposit 25% of the penalty within 30 days, even though the quantum of duty had not been re-determined in appeal.

Analysis: The Court noted that the same controversy had already been considered in earlier decisions, where the view was taken that the benefit of the proviso to section 11AC could still be extended in appropriate cases. It further observed that the Department's own circular required the adjudicating authority to mention the availability of the reduced-penalty option in the order-in-original, and that it would be unjust to deny the assessee the benefit where duty had already been paid and the communication required for payment of interest and reduced penalty had not been made clear earlier. The Court held that the Tribunal's approach was consistent with the earlier binding view and that no different view was called for.

Conclusion: The challenge to the Tribunal's order failed. The benefit of reduced penalty under section 11AC was upheld and the appeal by the Revenue was dismissed.

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