Reduced penalty option under Section 11AC granted where duty demand and penalty were sustained for clandestine removal

Where duty demand based on clandestine removal and penalty under Section 11AC are sustained, the assessee remains entitled to the statutory option to discharge reduced penalty within 30 days of communication of the order. The appellate forum noted that the lower authorities had not extended the proviso-based relief, and followed the settled Tribunal approach by granting that option. The assessee was therefore permitted to pay 25% of the penalty within 30 days, failing which the penalty would stand at 100%.

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Issues: Whether, while sustaining duty demand and penalty under Section 11AC, the assessee was entitled to the statutory option to pay reduced penalty within 30 days of communication of the order.

Analysis: The duty demand based on clandestine removal was not disputed, and the penalty under Section 11AC was upheld. As the lower authorities had not extended the option contemplated by the proviso to Section 11AC, the appellate forum could grant that relief in accordance with the Tribunal's settled approach.

Conclusion: The assessee was granted the option to pay 25% of the penalty within 30 days of communication of the order, failing which the penalty would remain at 100%.

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