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TMI Blog2010 (10) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has the power to reduce mandatory penalty under section 11AC of the Central Excise Act, 1944? 2. Whether the respondents are entitled to the benefit of first and second provisos to section 11AC of the Central Excise Act, 1944?" As to Question No. 1: 4. The first question relating to the absence of power in Tribunal to reduce mandatory penalty under section 11AC of the Act is no more res integra in view of the judgments of the Apex Court in the case of Union of India v. Dharmendra Textile Processors, 2008 (231) ELT 3 (SC) and Union of India v. Rajasthan Spinning and Weaving Mills, 2009 (238) ELT 3 (SC) which judgments are holding the field. In the said judgments the Hon'ble Supreme Court has held that while interpreting the provisions of law the Court only interprets and cannot legislate and further that where wordings of the Statute are unambiguous and do not lead to absurd and unreasonable results, they have to be given their full effect, without adding any foreign words to the same. The said judgments are followed by this Court in number of cases, the details of which are not necessary for the purpose of answering the first question. In this view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty days of the communication of the order by which such increase in the duty takes effect. Explanation-- For the removal of doubts, it is hereby declared that-- (1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of section 11A relates to notices issued prior to the date on which the Finance Bill, 2000 received the assent of the President; (2) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person." 6. A perusal of section 11AC of the Act shows that an amount equal to the amount of duty as determined by the Central Excise Officer under section 11A(2) of the Act is required to be paid by the assessee where any duty of excise has not been (a) levied or paid or (b) has been short paid or ( c ) erroneously refunded by the reason of fraud, collusion or any wilful mis-statement or suppression of facts or (d) contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. The aforesaid principal cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it still does not take advantage of the first Proviso to Section 11AC of the Act, it will be entirely at its own peril. The Court, therefore, held that it would be beneficial both from the point of view of the revenue as well as the assessee, if the options available to the assessee are mentioned in the adjudication order itself. 11. Pursuant to the above judgment of the Delhi High Court, the Central Excise department has issued Circular on 22.05.2008 wherein it is clarified that in all the cases wherein penalty under Section 11AC of the Act is imposed, the provisions contained in the first and second Proviso to Section 11AC should be mandatorily mentioned in the order in original itself by the adjudicating authority. 12. The Punjab & Haryana High Court was also faced with the similar situation and in its judgment in the case of Commissioner of Central Excise, Rohtak v. J.R.Fabrics Private Limited, 2009 (238) ELT 209, the Court took the view that it was appropriate to notice that the period in question was 28.07.2001 to 28.02.2002 and there was no dispute that the proviso added by the Act No. X of 2000 was made applicable with effect from 12.05.2000, which provides that an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11AC does not start running. It, therefore, follows that wherever the assessee has received demand quantifying the amount of duty and the interest payable thereon, he is bound to pay it within 30 days from the receipt thereof, if he wants to take advantage of the first proviso. If he does not pay the quantified demand within 30 days from the receipt thereof, the benefit of the reduced penalty is not available to the assessee. If this be so, once the assessee failed to pay duty, interest and penalty within 30 days from the date of receipt of the quantified demand based on the order-in-original, then the assessee would not get fresh period of 30 days to make payment in the event demand is enhanced in appeal at the instance of Revenue. In the event of increased or enhanced duty liability or interest or penalty such period of 30 days for payment of demand is available only to that assessee, who has paid quantified demand within 30 days from the date of demand based on the adjudication order or order-in-original pursuant to first proviso to section 11AC of the Act. Failure to pay increased quantified demand pursuance to the order in appeal or revision as the case may be within 30 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e benefit of 25% penalty, the assessee is required to pay differential amount within 30 days of the passing of the order by the appellate authority. A combined reading of all the 4 proviso would, therefore, make it clear that the benefit of 25% penalty is applicable only when the assessee has paid duty, interest and the reduced penalty within 30 days of communication of the order passed by the adjudicating authority. However, if the penalty amount is increased at the appellate stage, in that case the 25% of differential amount of penalty can be paid within 30 days of communication of said appellate order..." 16. The above circular is in consonance with the spirit of provisos to section 11AC interpreted by various High Court, with which we wholly concur. Consideration on Merits: 17. Having understood the sweep of section 11AC and provisos thereto and having examined the factual matrix emerging in appeal, Mr. Kantawala has fairly stated that the appellant did not comply with the requirements of the provisos to section 11AC of the Act since the appellant did not pay the amount of interest under section 11AC within a period of 30 days from the date of receipt of quantified demand. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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