TaxTMI 
TaxTMI 
2010 (1) TMI 518
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....e, the tribunal is justified and has committed a substantial error of law in reducing the mandatory penalty imposed under Section 11AC of the Central Excise Act, 1944 on the ground that the confirmed duty was deposited before issuance of the show cause notice ?" 2. This Court has issued notice for final disposal on 4-12-2009. Despite service of notice nobody appears on behalf of the respondent. 3. In this case, show cause notice was issued on 23-8-2005 proposing to levy Central Excise duty amounting to Rs. 6,05,324/- leviable on 32561.842 Kgs. of Polyester Texturized Yarn, valued at Rs. 21,16,519/- and to recover interest at the appropriate rate on the amount of duty under Section 11AB of the Central Excise Act, 1944 and to impose pen....
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....g for the Revenue has submitted that the Tribunal has committed very serious error of law in reducing the mandatory penalty imposed under Section 11AC of the Act on the ground that the confirmed duty was deposited before issuance of show-cause notice. He has further submitted that though the duty was paid by the respondent-assessee before issuance of show-cause notice, the duty was paid after detection of the evasion of the department. The respondent had illicitly cleared the Polyester Texturised Yarn without preparing central excise invoices, without maintaining central excise records and without payment of central excise duty and the respondent had deposited the duty amount on 24-5-2003. The act of payment of duty prior to issuance of sho....
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....to Section 11AC of the Act. In view of the 1st, 2nd, 3rd and 4th Proviso to Section 11AC, it is clear that the said provisions are with reference to payment of penalty, that too, if paid along with interest and duty by the 30 day of communication of the order in original. The legislative intent of the said Provision is to reduce the litigation and expedite the recovery of the Govt, dues and as an incentive, the penalty is reduced to 1/4th of the duty provided the same is also paid within the period of 30 days. He has, therefore, submitted that the impugned order passed by the Tribunal is erroneous and hence, the substantial question of law proposed to be formulated by the Revenue is required to be formulated after the appeal being admitted ....
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....l of the goods, the 1st Proviso to Section 11AC of the Act can certainly be pressed into service. It talks about the option to be given to the assessee to pay excise duty levied within 30 days from the date of receipt of the order and in that case, penalty under Section 11AC of the Act is reduced to 25% of the amount of the excise duty levied in the order passed by the Adjudicating Authority. Considering this aspect of the matter, the Tribunal sustained the levy of penalty to the extent of 25% of the duty amount on the ground that the entire duty was deposited before issuance of the show-cause notice. It is true that in the case of Union of India v. Dharamendra Textiles, 2008 (231) E.L.T. 3 (S.C.), the Apex Court took the view that the appl....
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.... or read that decision in that matter and further held that the decision in Dharamendra Textiles (supra) cannot be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the Section for its application. The Court, therefore, while setting aside the orders passed by the Tribunal remanded the matters back to the respective Tribunals for fresh consideration in accordance with law and in light of the said judgment. 9. In view of the above discussion, we are of the view that the order passed by the Tribunal retaining the penalty of 25% of the duty amount seems to be quite justified in view of the decision of the Delhi High Court in the case of K.P. P....