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TMI Blog2014 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as "the assessee"] are the manufacturers of different kinds of metal powders. The Officers of the Directorate General of Anti-Evasion, inspected the factory of the assessee on 19th January, 1998. Detailed investigation conducted by the officials found that credit was taken wrongly and a false installation certificate was furnished to the Department. When this defect was pointed out, the assessee reversed the Modvat credit immediately. Thereafter, show cause notice was issued to the assessee. The Original Authority after considering the explanation, passed an order disallowing the credit and directed the assessee to pay penalty. The Original Authority imposed penalty on the Secretary of the Company. The said order was challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said view was accepted by the Appellate Authority also. The Tribunal merely followed the earlier orders and absolved the assessee from the statutory liability of payment of interest and penalty. 7. The core issue is whether the assessee would be absolved from the liability to pay penalty in view of their payment of differential duty before the issuance of show cause notice. 8. Section 11AB deals with interest on delayed payment of duty. Similarly Section 11AC deals with penalty for short-levy or non-levy of duty in certain cases. Both these provisions indicate that in case the duty 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 misstate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors, [2008 (231) E.L.T. 3], observed that though the application of Section 11AC would depend upon existence or otherwise of the conditions expressly stated in the Section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. 12. In view of the judgment of the Supreme Court in Rajasthan Spinning and Weaving Mills, 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. Therefore, the said finding is liable to be set aside. 13. The substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under the Section would be twenty-five per cent of the duty so determined. 16. When the assessee is having the benefit of payment of penalty at 25% of the duty determined, in case the duty is paid within a period of thirty days after the issuance of show cause notice, it is beyond logic as to why they should not be given the indulgence to pay penalty at 25%. The prompt payment of duty after pointing out suppression and before issuance of show cause notice cannot be taken as a negative factor against the assessee to claim penalty at 100%. In case the penalty is paid even before issuance of sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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