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2018 (5) TMI 1669

not pay the penalty imposed u/s 11AC of the Central Excise Act. Mere payment of differential duty, i.e. duty on the goods S.S. ingots found short by 4510 kg and S.S. flats found in the premises of M/s Shree Shyam Cutter and M/s Shree Ganesh Cutter would not matter once the conditions for imposition of penalty under Section 11AC was satisfied - the payment of duty, whether made before or after issuing of SCN, is not determinative and a relevant factor for deciding whether or not penalty should be imposed under Section 11AC of the Excise Act. This issue is to be decided having regard to the satisfaction or non-satisfaction of the conditions stipulated in Section 11AC of the Act. - The appellant does not dispute and does not challenge the .....

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ion Bench of this Court in Commissioner of Central Excise Delhi-I versus Prabhat Zarda Factory (I) Private Limited, 2012 (281) ELT 665 (Delhi). 4. The undisputed factual position is that the appellant was a manufacturer of S.S. ingots and S.S. flats. Search operation was conducted in the factory of the appellant by the Central Excise Officer on 19th November, 2005, and shortage of 4510 kg of S.S. ingots was found on comparison with the balance shown in the books. Two concerns, namely, M/s Shree Shyam Cutter and M/s Shree Ganesh Cutter situated in Wazirpur industrial area were also subjected to search on the next date, i.e. 20th November, 2005 and 76.10 M.T. and 120.50 M.T. S.S. flats were found lying in the said premises. M/s Shree Shyam Cu .....

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/s Shree Shyam Cutter and M/s Shree Ganesh Cutter have been reduced to ₹ 1,00,000/- each. 6. On merits whether the addition was justified or not, we have declined to interfere as was recorded in our order dated 19th February, 2018. This order observes that the findings recorded by the Tribunal are findings of fact, based on statements on oath recorded during the course of search and material physically found which corroborates and confirms the statements made. 7. It is accepted and admitted that the appellant herein did not pay the penalty imposed under Section 11AC of the Central Excise Act. Mere payment of differential duty, i.e. duty on the goods S.S. ingots found short by 4510 kg and S.S. flats found in the premises of M/s Shree S .....

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t. XXXX XXXX 5. In our view the reason assigned by the Tribunal to strike down the levy of penalty against the assessee is as misconceived as the interpretation of Dharmendra Textile is misconstrued by the Revenue. We completely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can alter the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act. XXXX XXXX 30. At this stage, we need to examine the recent decision of this Court in Dharmendra Textile. In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short-payment of duty the penalty clause wou .....

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and contravention of the Act and Rules. This position has been clearly stated in Prabhat Zarda Factory (I) Private Limited (supra). 9. We would also record that Supreme Court in Rajasthan Spinning and Weaving Mills (supra) has clarified and explained their earlier decision in the case of Union of India versus Dharmendra Textile Processors, 2008 (231) ELT 3 (SC) holding that once the conditions mentioned in Section 11AC were fulfilled, then there is no discretion left with the authority concerned to reduce the penalty to an amount less than the duty determined. This decision again highlights that the conditions mentioned in Section 11AC should be first fulfilled. 10. The appellant does not dispute and does not challenge the conditions mentio .....

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