2009 (10) TMI 801 - AT - Central Excise

Summary

Issues:
Penalty under Section 11AC reduced, Time bar for show cause notice, Imposition of penalty on the appellant.

Analysis:
The appellant filed an appeal against an order reducing the penalty under Section 11AC from Rs. 85,186/- to Rs. 50,000/-. The central issue pertained to whether the penalty under Section 11AC was applicable to the appellant. The appellant had already paid the duty upon Department's notification. The Advocate argued that the show cause notice was time-barred due to no suppression or fraud. He contended that if a penalty was warranted under Section 11AC, it should be up to 25% of the duty demand since the duty and interest were paid before adjudication.

The Revenue's representative, however, asserted that the appellant's admission of duty liability upon Department's notification constituted suppression of facts, justifying the penalty. They cited a Supreme Court ruling supporting penalty imposition even if duty and interest were paid before the show cause notice. The presiding judge examined Section 11AC, emphasizing that if duty is paid within 30 days of the adjudication order, the penalty is reduced to 25% of the duty amount; otherwise, it stands at 100%. In this case, the appellant admitted to underpaying duty, rectified upon Department's notification, making them liable for a 100% penalty. However, if the appellant pays the penalty within 30 days of the order receipt, only 25% of the duty amount would be required, given the prior reversal of Cenvat credit and interest payment before the show cause notice.

In conclusion, the appeal was disposed of with the understanding that the appellant would be liable for a reduced penalty of 25% of the duty amount if paid within 30 days of the order receipt, considering the circumstances of the case and the provisions of Section 11AC.