TMI Blog2010 (1) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... - K.A. Puj and Rajesh H. Shukla, JJ. Shri Gaurang H. Bhatt, for the Appellant. None, for the Respondent. [Judgment per : K.A. Puj, J. (Oral)]. - The Commissioner of Central Excise Customs, Surat has filed this Tax Appeal under Section-35G of the Central Excise Act, 1944 proposing to formulate the following substantial question of law for determination and consideration of this Court :- "Whether in the facts and circumstances of the present case, 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der was carried in appeal by the Revenue before the CEGAT and the Tribunal vide its order dated 28-3-2008 confirmed the penalty equivalent to 25% of the duty amount, on the basis of first proviso to Section 11AC and after referring to the judgment of Delhi High Court in the case of Commissioner of Central Excise v. Malbro Appliances, 2007 (208) E.L.T. 503 (Tri.-Del.) = 2007 (79) RLT 109 (Delhi.). 6. Mr. Gaurang H. Bhatt, learned Standing Counsel appearing 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st and second Proviso to Section 11AC of the Act. The respondent had paid the duty demanded before the issuance of the show-cause notice. The respondent had not, however, paid the interest due and also not paid the penalty. The duty was paid only after the clandestine removal was detected by the department. The equal penalty under Section 11AC can be varied only after the duty amount confirmed is increased or decreased in terms of the 3rd and 4th Proviso 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. He accordingly allowed the appeal to the extent of setting aside penalty and interest and order in original was modified to that extent. In the appeal before the Tribunal, the order of the Commissioner (Appeals) was modified to the extent of sustaining the penalty equivalent to 25% of the duty amount on the ground that the duty has been deposited before issuance of the show-cause notice. If there is no evidence to prove the clandestine removal 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reduced. While referring to the decision of the Dharamendra Textiles (supra), the Court observed that in almost every case relating to penalty, the said decision is referred to on behalf of the Revenue as if it laid down that in every case of non payment or short payment of duty, the penalty clause would automatically get attracted and the authority had no discretion in the matter. The Court further observed that there was no reason to understand 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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