Manufacturers penalized for excise duty evasion upheld by Tribunal under Central Excise Act.

The appellants, manufacturers of specific goods, faced allegations of clearing excisable goods clandestinely without paying Central Excise duty by using a second set of invoices. The Tribunal upheld penalties under Section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002, due to suppression of facts and mis-declaration of value. The appellants were granted the option to pay 25% of the duty as penalty within 30 days to avoid the full penalty under Section 11AC. The appeal was partly allowed based on these considerations.

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Issues:
1. Allegations of clearing excisable goods clandestinely without payment of Central Excise duty by raising a second set of invoices.
2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002.
3. Contention regarding penalty payment within 30 days to avoid full penalty under Section 11AC.

Analysis:
1. The appellants, manufacturers of specific goods falling under the Central Excise Tariff Act, faced allegations of clearing excisable goods clandestinely without paying Central Excise duty by using a second set of invoices during 2003-04. Following an investigation, the appellant paid the duty and interest, leading to the issuance of a show cause notice for the appropriation of the paid duty and interest, along with penalties under Section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002.

2. The advocate for the appellants cited various Tribunal decisions and High Court judgments in the appeal memorandum. However, it was acknowledged that penalties under Section 11AC are mandatory as per Supreme Court decisions. The show cause notice invoked Section 11D of the Central Excise Act for payment of collected amounts to the government but proposed duty demand under the proviso to Section 11A due to suppression of facts and mis-declaration of value. It was found that clearances were made under the second set of invoices where duty was collected but not remitted to the Department. Considering the facts, the invocation of the extended period and penalty under Section 11AC was deemed appropriate and sustainable.

3. The advocate requested consideration for the penalty under Section 11AC, highlighting the provision that allows for penalty waiver if duty, interest, and 25% of the duty are paid within 30 days of the order. Referring to decisions from the High Court and Tribunal, the Tribunal decided to grant the appellant the option to pay 25% of the duty as penalty within 30 days of receiving the order. Failure to do so would result in the appellant being liable to pay the penalty equal to the duty amount as per Section 11AC. The appeal was partly allowed based on the above considerations.

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