Cum-duty valuation and mandatory equal penalty under section 11AC were applied in the assessed excise dispute.

Valuation was upheld on the facts because the realised sale price was treated as cum-duty price for determining assessable value, and the Revenue's contrary challenge failed. The discussion also states that, where section 11AC applies, penalty is coextensive with the duty evaded and cannot be reduced below that amount. Accordingly, the penalty was enhanced to match the duty confirmed, while preserving the stated option of reduced discharge if paid within the prescribed time. The note therefore highlights both the factual basis for sustaining the valuation approach and the mandatory character of penalty under section 11AC when attracted.

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Issues: (i) whether the price realised on the impugned clearances was to be treated as cum-duty price while determining the assessable value and the consequential duty demand, and (ii) whether the penalty under section 11AC was required to be fixed at an amount equal to the duty evaded.

Issue (i): whether the price realised on the impugned clearances was to be treated as cum-duty price while determining the assessable value and the consequential duty demand.

Analysis: The valuation plea was examined in the light of the nature of the transactions and the factual matrix relied upon by the Revenue. The contention based on the cited precedent dealing with a different factual situation was found inapplicable, while the circumstances were held to be closer to a case where the price realisation was treated in the manner adopted by the Commissioner (Appeals). The reduction in duty on this basis was therefore sustained.

Conclusion: The finding of the Commissioner (Appeals) on valuation was upheld, and the Revenue's challenge on this issue failed.

Issue (ii): whether the penalty under section 11AC was required to be fixed at an amount equal to the duty evaded.

Analysis: It was held that the law governing section 11AC required the penalty, where attracted, to match the duty evaded and that discretion was not available to reduce it below that measure. The penalty sustained by the Commissioner (Appeals) was therefore enhanced to the amount of duty confirmed under the order.

Conclusion: The penalty under section 11AC was held to be payable at the amount of duty evaded, subject to the stipulated option of reduced discharge if paid within the prescribed time.

Final Conclusion: The appeal succeeded only to the extent of enhancement of the section 11AC penalty, while the valuation-based reduction in duty was maintained.

Ratio Decidendi: Where section 11AC applies, the penalty is coextensive with the duty evaded, and valuation findings may be sustained if the factual matrix supports treatment of the realised price in the manner adopted by the appellate authority.

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