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M/s Chandra Metal Enterprises Versus Deputy Commissioner, Central Excise, Agra

2015 (10) TMI 509 - ALLAHABAD HIGH COURT

Penalty u/s 11Ac - Benefit of reduced penalty - whether the appellant was entitled to the first and second proviso to Section 11AC of the Central Excise Act, 1944 with regard to the payment of penalty to the tune of 25% - Held that:- Penalty equal to the duty amount of ₹ 93,112.00 was imposed. It is also clear that the duty had already been deposited prior to the issuance of the show cause notice. We also find that the Superintendent,Central Excise, Agra had issued an order dated 01.08.201 .....

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ven in the instant case and, therefore, to that extent the order in original imposing penalty is in violation of the first proviso to Section 11AC of the Act. - duty had already been paid before the issuance of show cause notice. The appellant was therefore entitled to pay 25% penalty only. - Decided in favour of assessee. - Central Excise Appeal No. 190 of 2013 - Dated:- 30-9-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Keserwani, JJ. ORDER ( Per: Tarun Agarwala, J. ) We have .....

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been settled by a decision of this Court dated 09.08.2012 in Central Excise Appeal Deffective No. 23 of 2012, M/s Kotsons Ltd. Vs. Asstt. Commissioner, Central Excise and another as well as a decision of this Court dated 30.09.2015 in Civil Misc. Writ Petition (Tax) No. 1661 of 2009, M/s Chandra Kamal Corporation and another Vs. Union of India and others. In the instant case, the operrative portion of the order in original is extracted hereunder: "I confirm the demand of Central Excise duty .....

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d with Section 11AC of the Central Excise Act, 1944 for surreptitious removal of the goods in this case. I also confirm the interest demanded under the provisions of Section 11AB Central Excise Act, 1944." From the aforesaid, it is clear that the penalty equal to the duty amount of ₹ 93,112.00 was imposed. It is also clear that the duty had already been deposited prior to the issuance of the show cause notice. We also find that the Superintendent,Central Excise, Agra had issued an ord .....

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cause notice, the assessee was liable to pay only 25% of the duty amount as penalty and that the adjudicating authority could not demand more than 25% of the duty amount by way of penalty, in view of the first proviso to Section 11AC of the Act. Based on the said order of the Delhi High Court, the Central Board of Excise and Customs issued a circular dated 22.5.2008. For facility, the said circular is extracted hereunder: "F. No.208/07/2008-CX-6 Government of India Ministry of Finance Depar .....

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Court judgment in the case of K.P. Pouches (P) Ltd [2008-TIOL-240-HC-DEL-CX]. In para 27 of the order, the High Court has opined that the adjudication authority should explicitly state the option available to the assessee under section 11AC of the Act in its adjudication order. 2. The matter has been examined . The first and second proviso to section 11AC of the Act read as follows; "Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable t .....

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quot; It is seen that these proviso to section 11AC of the Act have been specifically inserted to ensure speedy recoveries of the disputed amount. It is an incentive given to the assessee that if he pays the duty amount along with interest, the penalty is reduced to 25% of the duty. This provision is beneficial to the department as well as the assessee as rightly pointed out by Delhi High Court and therefore, the assessee should be made aware of the option available to him. 3. In view of the poi .....

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11AC was specifically inserted to ensure speedy recovery of the disputed amount and consequently an incentive was given to the assessee that, if he pays the duty and interest within the stipulated period, then penalty was reduced to 25% of the duty. The Board clarified that the said proviso was beneficial not only for the Department but also to the assessee. The Delhi High Court in K.P. Pouches (supra) held that the assessee should be informed of the option in the adjudication order itself. Sim .....

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.L.T. 10, the Gujrat High Court after considering the circular dated 22.5.2008 held, that wherever penalty under Section 11AC of the Act was imposed, the provisions contained in first and second proviso of Section 11AC should be mandatorily mentioned in the order passed by the adjudicating authority. Similar view was again reiterated in Commissioner of Central Excise and Customs, Surat-I vs. Bhagyodaya Silk Industries, 2010 (262)E.L.T. 248 (Guj.). In the light of the aforesaid, the adjudicating .....

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