Appellate Tribunal confirms duty demand, upholds penalties, grants reduced penalty option, imposes penalty on director.

The Appellate Tribunal CESTAT, Ahmedabad confirmed the duty demand against the appellant, upheld the penalty imposed under Section 11AC, granted the appellant the option to pay dues with a reduced penalty of 25%, and imposed a penalty on the director of the unit for involvement in the removal of duty-free raw material without payment. The penalty on the director was reduced from Rs.60,000 to Rs.15,000, and his appeal was rejected.

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Issues:
Confirmation of demand of duty against the appellant, imposition of penalty under Section 11AC, extension of option to pay dues with reduced penalty, imposition of penalty on the director of the unit.

Confirmation of Demand of Duty:
The appellant, a 100% EOU, had shortages of duty-free procured indigenous raw material detected by officers during a visit to the factory. The appellant's representative acknowledged the illegal clearance of such raw material and accepted the duty liability. The appellant did not dispute the confirmation of the duty demand, leading to the confirmation of duty along with interest as uncontested.

Imposition of Penalty under Section 11AC:
The Hon'ble Supreme Court precedent in Union of India Vs. Dharmendra Textile Processors established that a penalty of 100% is mandatory under Section 11AC. Therefore, the penalty imposed by the authorities below, amounting to Rs.2,66,462, was upheld by the Tribunal.

Extension of Option to Pay Dues with Reduced Penalty:
The appellate forum extended an option to the appellant to pay the entire dues along with 25% of the penalty within thirty days from the communication of the order. This option, as per legal precedents like Swati Chemicals Industries Ltd. and judgments from the Hon'ble High Court of Gujarat, would reduce the penalty from 100% to 25%.

Imposition of Penalty on the Director of the Unit:
Regarding the penalty on the director of the unit, it was argued that since a penalty was already imposed on the unit, no separate penalty should be levied on the director. However, it was contended that the director's involvement in the removal of raw material without duty payment made him liable for penalty. The director's statement admitting to the clearance of duty-free raw material without payment established his liability. The penalty on the director was reduced from Rs.60,000 to Rs.15,000 due to the circumstances of the case, while his appeal was rejected.

In conclusion, the confirmation of duty demand, imposition of penalty under Section 11AC, extension of the option to pay dues with reduced penalty, and the imposition of penalty on the director were the key issues addressed in the judgment delivered by the Appellate Tribunal CESTAT, Ahmedabad.

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