TaxTMI 
TaxTMI 
2015 (2) TMI 89
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....CESTAT was right in reducing the penalty to Rs. 1,00,000/= contrary to the mandatory provision of Section 11AC of the Central Excise Act, 1944 and in view of the decision of the Supreme Court in the case of Sony India Ltd. - Vs - Commissioner of Central Excise, Delhi reported in 2004 (167) ELT 385 (SC)? 2. The case relates to a claim for duty against the respondent assessee on the ground that he adopted a lower value for clearing cotton yarn from the factory during October, 1994 to December, 1999. A show cause notice was issued for recovery of duty short levied invoking the provisions of Section 11A of the Central Excise Act together with penalty under Section 11AC of the Act read with Rule 173Q of the Central Excise Rules. Before the Orig....
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....ing the case on hand, it is relevant to extract the portion of the order passed by the Tribunal by which the penalty was modified. For better clarity, the relevant portion of the impugned order is extracted hereunder :- 3. After hearing both sides and studying the case records, I find that the appellants are one of a large number of textile units engaged in the manufacture of cotton yarn in Erode. The appellants have not established that they had short paid the duty over a period of above three years owing to communication error with their commission agents. This plea is obviously erroneous and not acceptable. Therefore, the findings of the lower authorities in ....
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....7) SC 314 :: 2009 (238 ELT) 3 (SC)). 8. In view of the subsequent decision of the Supreme Court in Dharmendra Textiles case and Rajasthan Spinning & Weaving Mills case (supra), the core issue that arises for consideration is whether penalty under Section 11AC of the Central Excise Act becomes mandatory in a case of demand confirmed by invoking proviso to Section 11A? 9. This Court had occasion to deal with similar issue in CMA No.1099 of 2008, wherein the decisions relied on by the learned standing counsel for the appellant/Revenue in Dharmendra Textiles case and Rajasthan Spinning & Weaving Mills case (supra) were taken into consideration and this Court, in the said judgment held as under :- &nb....
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....herefore be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. 24. It must, however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only in so far as Section 11AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the....