TMI Blog2014 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Central Excise Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay penalty equal to the duty so determined. The assessee is also liable to pay interest for the period in question. In view of the judgment of the Supreme Court in Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], the CESTAT was not correct in their finding that payment of differential duty before issuance of show cause notice would put an end to the penalty proceedings initiated against the assessee. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Authority reduced the amount of penalty imposed on the Company Secretary. 3. The order dated 9th April, 2003 on the file of the Commissioner (Appeals) was taken up in second appeal by the assessee and the Company Secretary before the CESTAT. The CESTAT [2004 (164) E.L.T. 449 (Tri.-Chen.)] by following the earlier decisions opined that interest and penalty under Sections 11AB and 11AC respectively of the Central Excise Act are not leviable when the duty amount is paid before issuance of show cause notice. The legality and correctness of the said finding is challenged in this civil miscellaneous appeal at the instance of the Revenue. The Substantial Question : 4. The Revenue has raised the following substantial question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay penalty equal to the duty so determined. The assessee is also liable to pay interest for the period in question. 9. The CESTAT proceeded on the basis that in case the differential duty is paid even before issuance of show cause notice, no liability would be cast on the assessee to pay penalty. The CESTAT has followed the earlier decisions of the Tribunal in support of the stand taken to absolve the assessee from the liability to pay interest and penalty. 10. The Supreme Court in Union of India v. Rajasthan Spinning and Weaving Mills [JT 2009 (7) SC 314 = 2009 (238) E.L.T. 3 (S.C.)] obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The next question is whether the original Authority was justified in directing the assessee to pay equal amount of the duty as penalty under Section 11AC of the Act. The penalty provision as contained in Section 11AC reads thus :- 11AC. Penalty for short-levy or non-levy of duty in certain cases. - Where any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11A, shall also be liable to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11AC of the Act. 17. The Original Authority instead of applying the first proviso to Section 11AC, determined penalty equal to the duty determined. The said direction appears to be against the spirit of the provision. Therefore, we are of the view that the order imposing penalty equal to the duty determined is liable to be set aside. The assessee is liable to pay penalty at 25% of the duty determined by the Original Authority. 18. The order passed by the CESTAT is set aside. The order passed by the Original Authority is restored with modification regarding the extent of penalty. In short, penalty is reduced to 25% of the differential duty determined by the Original Authority. 19. The civil miscellaneous appeal is allowed to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
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