Tribunal upholds Central Excise Duty demand, grants reduced penalty for waste removal without invoices.

The Tribunal upheld the demand for Central Excise Duty with interest and penalty under Section 11 AC due to the removal of waste and scraps without issuing invoices. However, the appellant was granted the opportunity to pay a reduced penalty of 25% of the duty amount within two months from the order date. The appeal was partly allowed, modifying the impugned order.

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Issues:
Alleged surreptitious removal of waste and scrap without issuance of Central Excise invoices; Duty payment prior to Show Cause Notice; Imposition of penalty under Section 11 AC.

Analysis:
The case involved the appellant, engaged in manufacturing microwave tower classifiable under Chapter 73 of the Central Excise Tariff Act, 1985, who removed MS Scraps to another entity without issuing Central Excise invoices. The Production Manager and CEO admitted the clearance of waste and scrap under challans, acknowledging a duty liability of &8377; 3,75,000, which was paid through a cheque. A Show Cause Notice was issued for alleged surreptitious removal, demanding duty recovery, interest, penalty under Section 11 AC, and appropriation of the already paid amount. The Adjudicating Authority confirmed the demand and imposed penalties. On appeal, the Commissioner (Appeals) upheld the decision, leading to the current appeal before the Tribunal.

During the proceedings, the consultant for the appellant contended that since the duty was paid before the Show Cause Notice, the penalty under Section 11 AC was unjustified. The Departmental Representative supported the lower authorities' orders. The Tribunal noted that the waste and scraps were cleared without issuing invoices, but the duty payment was made promptly upon notification by Central Excise Officers. The appellant admitted the unintentional violation of statutory provisions.

The Tribunal observed that the duty with interest was paid before the Show Cause Notice, and no intimation regarding the option to pay a reduced penalty was provided to the assessee by the lower authorities. Consequently, the demand for Central Excise Duty with interest was upheld, along with the penalty under Section 11 AC. However, the appellant was granted the opportunity to pay a reduced penalty of 25% of the duty amount within two months from the date of the order. The impugned order was modified accordingly, and the appeal was partly allowed.

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