TMI Blog2017 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the discrepancies so detected, deposited an additional duty of ₹ 3,29,192/- on 05.01.2006. Subsequently, a show cause notice dated 30.11.2006 was issued to it demanding explanation with regard to short deposit of the above duty and imposition of penalty under Section 11AC of the Act. The show cause notice was adjudicated by the Assistant Commissioner vide order in original dated 03.09.2007. The demand of excise duty of ₹ 3,29,192/- was confirmed but as the said amount had already been deposited it was directed to be appropriated towards the demand. At the same time an equal amount of penalty of ₹ 3,29,192/- was imposed under Section 11AC of the Act read with Rule 25 of the Central Excise Rules. The appeal of the assessee to the Commissioner (Appeals) was dismissed on 05.11.2007 and so was the appeal preferred before the CESTAT vide the impugned order leading to this appeal by the assessee. The appeal was admitted by this court on 07.03.2013 on the substantial questions of law as framed in the memo of appeal which reads as under:- a) Whether the CESTAT was justified in imposing penalty under Section 11AC of the Act, ignoring the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him under sub-section(1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section(1) in respect of the duty so paid. A bare reading of Sub-Section(1) of Section 11A of the Act indicates that it envisages recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. It provides that in either of the above situation the Excise Officer may serve notice on the person chargeable with duty requiring him to show cause why he should not pay the amount of duty specified in the notice. It means that the notice referred to is in respect of realisation of the excise duty only and not the penalty. Sub-Section (2B) of Section 11A of the Act provides that in cases where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded the person chargeable with the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P. Pouches (P) Ltd. Vs. Union of India 2008 (228) E.L.T. 31 (Delhi) which is said to have been followed by the Division Bench of our High Court as well. In response to the above argument Sri Krishna Agarwal, had submitted that the above decision of the Delhi High Court has been distinguished by the Delhi High Court itself as well as by the Bombay High Court. 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. Section 11AC of the Act as was applicable at the relevant time is quoted below:- 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 mis-statement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted, a penalty equal to the amount of the duty evaded as determined was payable. The first proviso to Section 11AC of the Act provides for the rebate in the payment of penalty provided the duty determined under Section 11A(2) of the Act and the interest payable thereon under Section 11AB of the Act is paid within 30 days from the date of communication of the order of the Central Excise Officer determining such duty. It lays down if the duty so determined with interest is paid within 30 days the penalty under Section 11AC shall be payable @ 25% of the duty so determined. However, there is a further proviso to it which lays down that the benefit of the above reduced penalty is admissible only if the amount of penalty so determined is also paid within 30 days of the communication of the order of the Central Excise Officer determining the duty. In other words, the aforesaid rebate in penalty is admissible on the deposit of not only the excise duty determined and the interest thereon but also 25% of the penalty so imposed within a period of 30 days of the service of the order. There is no dispute that the assessee had deposited the duty determined and the interest even prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the duty determined together with interest is paid within the stipulated time then the penalty payable would be 25% of the penalty imposed subject to the condition that the said 25% of the penalty is also paid within the stipulated period. 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 view expressed by the Castrol India Ltd. (Supra) was followed with approval by the Division Bench of the Delhi High Court in Principal Commissioner of Service Tax, Delhi-II Vs. Tops Security Ltd. 2016 (41) S.T.R. 612 (Del.) in a matter relating to service tax which contained an identical provision with regard to reduced penalty of 25%. In this case also the Division Bench disting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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