2011 (3) TMI 294 - AT - Central Excise

Under section 11AC - No option has been given to the appellants to pay 25% of penalty as per proviso 1 and 2 of Section 11AC In view of the judgement of Hon ble Delhi High Court in the case of K.P.Pouches Ltd. vs. Union of India reported (2008 -TMI - 30328 - HIGH COURT OF DELHI) CESTAT gave an option to the appellants to pay 25% of penalty within thirty days from the date of this order failing which the appellant shall pay 100% penalty - The appeals are allowed with consequential relief.

Summary

Issues:
- Appeal against imposition under section 11AC of Central Excise Act, 1944
- Allegations of facilitating ineligible credit and fraudulent transactions
- Lack of option to pay 25% penalty as per Section 11AC provisos

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved an appeal against the imposition under section 11AC of the Central Excise Act, 1944. The case revolved around the appellants being accused of facilitating ineligible credit to manufacturers through the use of fake cenvatable invoices issued by another entity. The appellants were found to have abetted in fraudulent credit availment, resulting in penalties being imposed on them. The appellants contested the penalties, arguing that they were not provided with the option to pay 25% of the penalty as mandated by provisos 1 and 2 of Section 11AC.

Upon examination, the Tribunal confirmed the penalties imposed on the appellants, citing similar cases where penalties were upheld in comparable circumstances. However, the Tribunal acknowledged the appellants' argument regarding the lack of opportunity to avail the 25% penalty payment option as per Section 11AC provisos. Referring to a judgment by the Delhi High Court in the case of K.P. Pouches Ltd. vs. Union of India, the Tribunal granted the appellants the option to pay 25% of the penalty within thirty days from the date of the order. Failure to do so would result in the appellants being liable to pay the full 100% penalty amount.

Furthermore, the Tribunal noted that the appellants had already paid a portion of the penalty amount and adjusted the penalty to 25% of the total penalty imposed. Consequently, the appeals were allowed, and the appellants were granted consequential relief. The judgment highlights the importance of providing parties with the opportunity to avail statutory penalty payment options and ensuring fairness in penalty imposition in line with legal provisions and precedents.