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2017 (8) TMI 106 - HC - Central ExcisePenalty - Shortage of inputs - Jurisdiction - Whether the CESTAT was justified in imposing penalty u/s 11AC of the Act, ignoring the fact that the Appellant has voluntarily paid the amount of duty equivalent to cenvat credit availed on the shortage of inputs as such issuance of show cause notice itself is without jurisdiction in view Section 11A(2B) of the Central Excise Act, 1944? - Held that: - the excise duty not levied or paid or short-levied or short-paid or which is erroneously refunded if deposited before the issuance of show cause notice under Sub-Section (1) of Section 11A of the Act, the Central Excise Officer on receiving information of the said deposit shall not issue any show-cause notice as contemplated by Sub-Section (1) of Section 11A of the Act. The use of the expressions " in respect of the duty" and "in respect of the duty so paid" in Sub-Section (2B) of Section 11A of the Act clearly establishes that it refers to the notice for the purposes of realisation of the excise duty and the payment thereof. This is also clear from the language of Sub-Section (1) of Section 11A of the Act which requires issuance of show cause notice in respect of the excise duty only - Section 11A of the Act has no application in respect of realisation of penalty if any imposed under Section 11AC of the Act - the imposition of penalty under Section 11AC of the Act is justified even though the duty of excise has been paid voluntarily by the assessee and the notice issued for imposing penalty was neither without jurisdiction or in violation of Section 11A(2B) of the Act which in fact was not applicable - decided against assessee. Quantum of penalty - Whether in the alternative, the CESTAT was justified in not considering that duty was paid much prior to the passing of the order by the adjudicating authority, as such there was no justification for imposing 100% penalty and at the most 25% penalty may have been imposed in view of the proviso to the Section 11AC of the CEA, 1944? - Held that: - There is no provision under the Act which places any obligation upon the adjudicating authority to first determine the penalty equal to 25% of the excise duty not levied or short levied or erroneously refunded and in the event it is not paid within 30 days to proceed to levy penalty of 100% of the deficient excise duty - There is no dispute that the assessee had deposited the duty determined and the interest even prior to determination of it by the Central Excise Officer but 25% of the penalty amount was not deposited by it within 30 days of the order which means it disentitled itself from the benefit of the reduced penalty as per the second proviso to Section 11 AC of the Act. Section 11AC of the Act neither requires the Central Excise Officer to determine the quantum of penalty to be 25% of the duty nor it require the Central Excise Officer to communicate the option available to the assessee under Section 11AC of the Act with regard to payment of 25% of the penalty - The determination of duty and penalty by itself is sufficient on part of the Central Excise Officer. It is then upon the assessee to pay 25% of the penalty within the stipulated period of 30 days to avail the benefit of the reduced penalty or to pay the whole of it. The benefit of reduced penalty of 25% is available to the assessee only on depositing the deficiency in duty determined with interest but also 25% of the duty determined by way of penalty within the stipulated period - The assessee not having deposited the said amount of 25% of the duty by way of penalty within 30 days of the communication of the order determining the duty and penalty, the assessee dis-entitled itself from the benefit of the reduced penalty - decided against assessee. Appeal dismissed - decided against appellant-assessee.
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