2009 (10) TMI 684 - AT - Central Excise

Summary

Issues:
1. Reduction of penalty on the appellant firm.
2. Applicability of Section 11AC of Central Excise Act.
3. Finality of penalty reduction to Rs. 10,000.
4. Consideration of penalty under Section 11AC.
5. Requirement of giving option to pay penalty.

Analysis:

1. The initial judgment confirmed a demand of Rs. 80,631 on raw materials against the appellant, with a penalty of Rs. 80,000 imposed under Section 11AC of the Central Excise Act, 1944. The penalty on the appellant firm was later reduced to Rs. 10,000 on appeal, while the penalty on the authorized signatory was set aside. The Tribunal held that the appeal filed by the Revenue for enhancement of penalty became infructuous and was rejected.

2. A subsequent appeal by the department challenged the order, leading to the Hon'ble Gujarat High Court remanding the matter back to the Tribunal for reconsideration of the applicability of Section 11AC in light of a specific judgment. The appellant argued that since no appeal was filed against the previous order reducing the penalty to Rs. 10,000, it had attained finality, and thus, the penalty could not be enhanced based on the remand order.

3. The Tribunal considered both sides' submissions and concluded that since the penalty issue had already been decided earlier, reconsideration of the same issue would amount to reviewing the Tribunal's own order. Therefore, the appeal filed by the Revenue was deemed infructuous. The Tribunal emphasized that filing an appeal against an order that merely rejects an appeal as infructuous is not necessary and does not affect the department's rights.

4. Regarding the penalty under Section 11AC, it was upheld due to a clear mis-declaration by the appellant regarding the raw materials and their dispatch to job workers. The Tribunal noted that the lower authorities did not provide the appellants with the option to pay a reduced penalty of 25% of the duty within 30 days. Therefore, following precedents and legal decisions, the Tribunal directed that the appellants be given the option to pay the dues within 30 days, leading to a reduction of the penalty to 25% of the duty amount if all dues are paid.

5. In conclusion, the appeal was disposed of in the above manner, emphasizing the requirement to give the appellants the option to pay the dues within the specified timeframe to avail of the reduced penalty.