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Issues: (i) Whether penalty under Section 11AC of the Central Excise Act, 1944 was required to be imposed at the equal amount of duty. (ii) Whether a separate penalty under Rule 173Q of the Central Excise Rules, 1944 was required in addition to the penalty under Section 11AC.
Issue (i): Whether penalty under Section 11AC of the Central Excise Act, 1944 was required to be imposed at the equal amount of duty.
Analysis: The matter concerned confirmed duty liability arising from undervaluation and the consequence of penalty under the mandatory penal provision. The Tribunal accepted the Revenue's position that penalty under Section 11AC is statutory and mandatory, and that the adjudicating authority has no discretion to reduce it below the amount of duty.
Conclusion: The issue was answered in favour of the Revenue and the penalty was required to be equal to the duty.
Issue (ii): Whether a separate penalty under Rule 173Q of the Central Excise Rules, 1944 was required in addition to the penalty under Section 11AC.
Analysis: Since penalty had already been imposed under Section 11AC, the Tribunal held that there was no further requirement to impose an additional penalty under Rule 173Q for the same conduct.
Conclusion: The issue was decided against the Revenue and no separate penalty under Rule 173Q was required.
Final Conclusion: The Revenue's appeals succeeded to the extent that the penalty under Section 11AC was enhanced to the duty amount, while the assessee's appeal was withdrawn, leaving the assessee with the statutory option to pay reduced penalty within the stipulated period.
Ratio Decidendi: Penalty under Section 11AC is mandatory and must follow the statutory measure prescribed, and once such penalty is imposed, a separate penalty for the same infraction is not required under Rule 173Q.
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