2017 (2) TMI 1299 - AT - Central Excise

Tribunal reinstates penalty under Section 11AC, upholding strict approach and legal precedents

The Tribunal allowed the Revenue's appeal, reinstating the penalty of Rs. 15,91,410 under Section 11AC, as the Commissioner(Appeals) lacked the authority ... Reduction of Penalty u/s 11AC - suppression of facts - Held that: - Ld. Commissioner(Appeals) only on the ground that there was no suppression of facts on the part of the appellant, reduced the penalty from equal amount of duty to ₹ 1 Lakh. However, Ld. Commissioner(Appeals) has not held that penalty is not imposable under Section 11AC - Ld. Commissioner(Appeals) has no power to reduced penalty under Section 11AC of the Customs Act, 1962 - the Commissioner(Appeals) has wrongly reduced the penalty from equal amount of duty to ₹ 1 Lakh - appeal allowed. Issues:Reduction of penalty under Section 11AC by the Commissioner(Appeals) from equal amount of duty to Rs. 1 Lakh.Analysis:The appeal was filed by the Revenue against the Order of the Commissioner(Appeals) where the penalty of Rs. 15,91,410 imposed under Section 11AC was reduced to Rs. 1 Lakh. The case involved the confirmation of differential duty on freight and insurance collected by the respondent from the customer, which was not mentioned in the excise invoice issued for clearance of excisable goods. The Revenue argued that the penalty under Section 11AC, equal to the duty confirmed, was rightly imposed due to the extended period involved from July 2000 to October 2000. The Commissioner(Appeals) reduced the penalty based on the lack of suppression of facts by the appellant. However, the Tribunal noted that the Commissioner(Appeals) did not provide a specific finding on the imposability of penalty under Section 11AC. Referring to judgments such as Union of India Vs. Dharamendra Textile Processors and Union of India Vs. Rajasthan Spinning & Weaving Mills, the Tribunal held that the Commissioner(Appeals) did not have the authority to reduce the penalty under Section 11AC as it was contrary to the decisions of the Hon'ble Apex Court. Therefore, the Tribunal modified the order and allowed the Revenue's appeal, reinstating the penalty of Rs. 15,91,410.This judgment highlights the importance of adhering to the provisions of Section 11AC and the limitations on the power of the Commissioner(Appeals) in reducing penalties imposed under this section. It emphasizes the need for clear findings on the imposability of penalties and the significance of legal precedents in determining the outcome of such cases. The decision serves as a reminder of the strict approach taken by the Tribunal in matters concerning penalties under the Customs Act, 1962, and the necessity for consistent application of legal principles in such matters.