Reduced penalty under Section 11AC and director penalty under Rule 209A were addressed on admitted duty evasion and invoice suppression.

Reduced penalty under Section 11AC was held available where the adjudication order had not expressly granted the statutory option, and the appellate forum could extend that benefit in line with settled law, subject to payment within one month of receipt of the order. Personal penalty on the Director under Rule 209A was sustained because the record showed clearances without Central Excise invoices and without duty payment, with those acts admitted to have been within his knowledge. The Director's penalty was upheld in principle, but the quantum was moderated on the facts.

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Issues: (i) Whether the benefit of 25% reduced penalty was available under Section 11AC of the Central Excise Act, 1944 when the adjudicating authority had not extended such option. (ii) Whether the penalty imposed on the Director under Rule 209A of the Central Excise Rules, 1944 required reduction.

Issue (i): The penalty order had not extended the statutory option of reduced penalty. In view of the settled legal position, the appellant was entitled to the benefit of payment of 25% of the penalty under Section 11AC, if made within one month from receipt of the order.

Conclusion: The benefit of 25% reduced penalty was extended to the assessee under Section 11AC, subject to timely payment.

Issue (ii): The Director had admitted that clearances were effected without issuing Central Excise invoices and without payment of duty, and the activities were done with his knowledge. This supported imposition of penalty, though the quantum could be moderated on the facts of the case.

Conclusion: The penalty on the Director was upheld in principle but reduced from Rs. 25,000 to Rs. 10,000.

Final Conclusion: The appeals succeeded only to the limited extent of granting reduced penalty under Section 11AC and lowering the personal penalty on the Director.

Ratio Decidendi: Where reduced penalty under Section 11AC is not granted in the adjudication order, the appellate forum may extend the statutory benefit in accordance with settled law, and a personal penalty on a director can be sustained where the clearances without invoice and duty payment were admitted and were within his knowledge.

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