Reduced penalty under Central Excise law applies when duty and interest are paid within the stipulated period.

Interpretation of the second proviso to Section 11AC of the Central Excise Act governed the penalty dispute. Where duty and interest are paid within the stipulated period, the assessee may avail the statutory reduced penalty of 25% instead of the penalty equal to duty. The issue was treated as covered by an earlier Division Bench view following the Delhi High Court, and no contrary Supreme Court or coordinate-court authority was shown. The Revenue therefore could not claim the full penalty, and the reduced penalty benefit was upheld; the appeal was dismissed.

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Issues: Whether the Revenue was entitled to levy penalty equal to the duty amount under Section 11AC of the Central Excise Act, 1944, or whether the assessee was entitled to the benefit of reduced penalty of 25%.

Analysis: The appeal turned on the interpretation of the second proviso to Section 11AC and the applicability of the line of authority holding that where duty and interest are paid within the stipulated period, the assessee can avail the reduced penalty prescribed by law. The court noted that the issue was identical to one already decided in a previous Division Bench decision following the Delhi High Court view, and no contrary decision of the same court or the Supreme Court was shown.

Conclusion: The Revenue was not entitled to succeed. The assessee was held entitled to the reduced penalty benefit, and the appeal was dismissed.

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