CX - Benefit of reduced quantum of penalty not available if only part of duty determined and interest payable thereon is paid: High Court
By TIOL News Service
CHANDIGARH, MAR 30, 2017: ON 04.07.2008, the DGCEI searched the appellant's premises and on the same day, the appellant paid duty amounting to Rs.5,22,759/- which was indicated as payable by the officers.
On 05.10.2009, the respondent issued a notice calling upon the appellant to show cause as to why the appellant ought not to be held liable to pay duty amounting to Rs.6,00,247/-. The demand was adjudicated.
On 08.08.2010, the Commissioner (Appeals) directed the appellant to deposit the balance duty and pay the penalty as pre-deposit.
On 16.09.2010, the appellant deposited the balance duty of Rs.77,498/-.
On 30.09.2013, the Commissioner (Appeals) dismissed the appellant's appeal and on 22.01.2016, the Tribunal, by the impugned order, dismissed the appellant's appeal. The Tribunal also denied the appellant the benefit of reduced penalty.
Nonetheless, the appellant had deposited 25% towards penalty in installments of Rs.60,000/- and Rs.90,086/- on 22.09.2016 and 04.01.2017, respectively.
An appeal came to be filed before the High Court against the Tribunal's order and was admitted.
After extracting the provisions of section 11AC&s.11Aof the CEA, 1944, the High Court answered the questions of law thus -
|
(i) Whether the appellant was entitled to the benefit of payment of only 25% of the penalty?
|
+ Even assuming that appellant paid the duty amounting to Rs.5,22,759/- on 04.07.2008 as per the instructions of the respondents, it would make no difference. The fact is that the adjudicating authority, by the order dated 02.03.2010 confirmed the duty amounting to Rs.6,00,247/-. The appellant deposited the balance duty of Rs.77,498/- only on 16.09.2010, i.e., beyond the period of 30 days from the date of the order-in-original passed by the adjudicating authority.
+ A party isabsolved of the liability to pay the entire penalty and is liable to pay the amount of penalty to the extent of 25% of the duty provided, however, that the duty as determined under sub-section (2) of section 11A and the interest payable thereon is paid within 30 days of communication of the order of the Central Excise Officer (CEO). The appellant, admittedly, paid the duty beyond the period of 30 days from the date of the communication of the order of the CEO, namely, 02.03.2010. The balance amount was paid only on 16.09.2010. The first proviso, therefore, does not come to the appellant's assistance.
+ The first Proviso not having been complied with, the appellant is not entitled to the benefit of the second Proviso. Thus, the appellant is not entitled to the benefit of the reduced duty.
+ Question No.1 is, therefore, answered in favour of the respondent and against the appellant.
|
(ii) Whether an assessee is liable to pay penalty only to the extent of the balance unpaid amount of the duty determined under section 11A(2) of the Act?
|
+ Under section 11AC, where any duty of excise has not been paid or has been short-paid, etc., the person who is liable to pay the duty, as determined under sub-section(2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined. Thus, the penalty is not to the extent of the entire duty but only to the extent of the duty so determined under section 11A(2). The quantum of the penalty is equal to the duty so determined.
+ To our mind, the words "such duty as determined" and the words "the interest payable thereon" refer to the entire duty determined and the entire interest payable and not to just a part thereof.
+ The concession of a reduced quantum of penalty is only where the duty as determined and interest payable thereon is paid. The first proviso does not confer the benefit if only a part of the duty as determined and the interest payable thereon is paid within the stipulated period of 30 days from the date of communication of the order of the CEO.
+ This view is supported by the third proviso. …for the purpose of section 11AC, which includes the provisos thereto, the duty determined by the final order is to be taken into account. Thus, even for the purpose of the first proviso, the duty determined refers to the duty determined not by the adjudicating authority but by the order that attains finality, be it the order of the Commissioner (Appeals), the Appellate Tribunal or the Court.
+ There is nothing in section 11AC that entitles the assessee to the benefit of the reduced quantum of penalty, if only a part of the duty, as determined, and the interest payable thereon is paid.
+ The second question is also answered against the appellant and in favour of the Revenue.
The appeal was dismissed.
(See 2017-TIOL-617-HC-P&H-CX)
