TaxTMI 
TaxTMI 
2017 (8) TMI 591
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....ther words, the fact that the Commissioner (Appeals) had reduced the quantum of penalty to 25% of the duty payable by the Assessee, provided the said sum was paid within a period of thirty (30) days, had caused grievance to the Revenue. 2. It was the contention of the Revenue before the Tribunal that this option could not have been given by the Commissioner (Appeals), as it was a case of clandestine removal of goods. 2.1. The Tribunal, via the impugned judgement, has accepted the stand of the Revenue and, accordingly, reversed the order of the Commissioner (Appeals), on this aspect of the matter, by relying upon the judgement of the Bombay High Court in the matter of : Commissioner of Central Excise and Customs, Aurangabad Vs. V.V.Patil S.S.K. Limited, 2007 (215) E.L.T. 23 (Bom.). 2.2. The Assessee, being aggrieved, has preferred an appeal to this Court. 2.3. The instant appeal was admitted on 29.01.2016, when, the following questions of law were framed for consideration by this Court: "1) Whether the order of the Tribunal rejecting option to pay penalty which is granted as a matter of right under Section 11AC is valid in law? 2) Whether the order of the Tribunal is right in ....
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....ed the matter in appeal, and as indicated at the outset, the Commissioner (Appeals) confirmed the order of the Adjudicating Authority, save and except to the extent it pertained to imposition of penalty. The Commissioner (Appeals), as alluded to above, accorded an option to the Assessee of paying the penalty equivalent to 25% of the duty imposed, provided the same was paid within thirty (30) days of communication of the order passed by him. Admittedly, the Assessee has paid the penalty amount, in terms of the option granted by the Commissioner (Appeals). 3.9. The Revenue, as indicated right at the outset, aggrieved by this option of reduced penalty amount, carried the matter in appeal. The Tribunal, as noticed above, ruled in favour of the Revenue. 4. The question, therefore, which we are required to deal with, veers around the interpretation to be given to the provisions of Section 11AC of the Central Excise Act, 1944 (in short, '1944 Act'). 4.1. For the sake of convenience, the said provision is extracted hereafter, as it obtained during the relevant period : "11AC. Penalty for short-levy or non-levy of duty in certain cases - Where any duty of excise has not been lev....
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....e thereunder with the intent to evade the payment of duty, the Assessee is liable to pay penalty equivalent to 100% of the duty so determined. The first proviso, however, carves out an exception to the main section - perhaps, to maximise the revenue, by holding out to the Assessee that, if, it were to accelerate the payment of dues, (i.e., duty and interest), by paying the same within the outer limit of thirty (30) days of the communication of the order of the Central Excise Officer, the penalty imposed would get reduced to 25% of the duty so determined. 5. The question, which arises for consideration is, when does the period of thirty (30) days commence ? The other inter-related question, which arises, is does the period of thirty (30) days provided in the first proviso to Section 11AC, commence from the date of the Adjudication Order, or, the date, when, the Appellate Authority passes the order ? 5.1. Ms.Hemalatha, who appears for the Revenue, says that the period of thirty days would commence from the date, when, the order of adjudication is passed in the matter. In other words, it is the learned counsel's submission that the Commissioner (Appeals) could not have given an ....
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.... Santoshi Tel Utpadak Kendra V. Deputy Commissioner of Sales Tax and Another, (1981) 3 SCC 466 Paragraph 11; Commissioner of Wealth Tax, Gujarat V. Vimlabeen Vadilal Mehta, AIR 1984 SC 302; Union of India and Others V. West Coast Paper Mills Ltd., (2004) 2 SCC 747 Paragraph 41; and the Full Bench Judgment of this Court in : State of Tamil Nadu Vs. Arumugham & Co., Jayalakshmi Sago Factory, Salem and Another, 1982 (51) STC 381). In other words, duty, as determined under Section 11A(2) of the 1944 Act, will attain finality, only, if, it is sustained by the Appellate Authority. In this case, the Appellate Authority was the Commissioner (Appeals). Therefore, in the instant case, when, the Commissioner (Appeals) gave the option to pay penalty, albeit, for a reduced amount equivalent to 25% of the duty so determined, in our opinion, no fault could be found with such a direction. 5.6. To illustrate the validity of this proposition, we may assume, in a given case, the Show Cause Notice proposes to impose duty in the sum of Rs. 12,00,000/- on an Assessee. The Assessee challenges the imposition of duty and the Adjudicating Authority, after hearing the Assessee and the representative of the ....
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....ation order. In that event, the Assessee would be liable to pay only 25% of the duty amount by way of penalty, otherwise he would be liable to pay 100% of the duty amount by way of penalty. 18. In the present case, as we have already noticed, the Assessee deposited the entire duty amount well before the show cause notice was issued and, therefore, the Assessee would be liable to pay only 25% of the duty amount as penalty. 19. It is quite clear that under these circumstances, the Assistant Commissioner could not have demanded more than 25% of the duty amount by way of penalty, in view of the first proviso to Section 11AC of the Act. Unfortunately, for reasons that are not available on record, the Assistant Commissioner demanded 100% of the duty amount by way of penalty. This was incorrect and contrary to the benefit that the Assessee was statutorily entitled to under the first proviso to Section 11AC of the Act. 20. Since the Assistant Commissioner had wrongly demanded 100% of the duty by way of penalty and the Assessee was under no obligation to pay it, the Assessee preferred an appeal before the Commissioner (Appeals) as well as before the Tribunal. Neither of these authorities....