Appellate Tribunal clarifies penalty rules on duty liability payment.

The Appellate Tribunal CESTAT, Ahmedabad directed the appellant to deposit 25% of the confirmed duty liability amount within 30 days and report compliance to the Assistant Commissioner within the same period. The benefit of reduced penalty was contingent upon the payment of interest as calculated by them. This decision clarified the penalty imposition under Section 11AC of the Central Excise Act, 1944, in the case at hand.

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Issues:
1. Imposition of penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved the imposition of penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal noted that the Revenue had filed an appeal before the High Court of Gujarat specifically challenging the imposition of mandatory penalty on the appellant. The High Court's appeal focused on the penalty under Section 11AC, emphasizing the need for the Tribunal to assess the quantum of the penalty. The appellant's counsel highlighted that there was no dispute regarding the payment of Central Excise duty for the captively consumed goods and requested the benefit of a reduced penalty based on a previous judgment by the High Court of Gujarat in a similar case.

The Tribunal carefully considered the arguments presented by both sides and identified the core issue at hand - whether an equivalent amount of penalty should be imposed on the appellant under Section 11AC of the Act. It was acknowledged that the appellant had accepted the duty liability for the goods consumed internally and had paid the same before the issuance of the Show Cause Notice. While recognizing that penalty under Section 11AC is equal to the duty amount paid in such cases, the Tribunal referred to the High Court's ruling in the case of Aakash Fashion Prints Pvt. Ltd., which allowed for a 25% reduction in the penalty if paid within 30 days of the Tribunal's order.

Consequently, the Tribunal directed the appellant to deposit 25% of the confirmed duty liability amount within 30 days and report compliance to the Assistant Commissioner within the same period. Additionally, the appellant was informed that the benefit of reduced penalty was contingent upon the payment of interest as calculated by them. The appeal was disposed of based on the above directives, providing clarity on the penalty imposition under Section 11AC in the context of the appellant's case.

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