Whether penalty under section 11AC be less than the duty amount ?

PJ/Case Laws/2012-13/1510

Case:- COMMISSIONER OF CENTRAL EXCISE Versus GROWELL AGRI PRODUCTS PVT. LTD.

Citation:- 2013 (289) E.L.T. 31 (P & H)

Penalty - Quantum of - Reduced by Tribunal after recording finding that shortage of duty paid inputs was on account of pilferage and their becoming sub-standard, which did not amount to deliberate mis-statement or concealment - HELD : Case did not fall under Section 11AC of Central Excise Act, 1944, which prescribes minimum penalty - In that view, reduction of quantum of penalty upheld.

Brief Facts:-The Department initiated proceedings for levy of duty and vide Order-in-original, demand of duty was raised. Apart from duty, penalty was also levied. On appeal, the same was upheld by the Commissioner (Appeals). However, on further appeal, the Tribunal reduced the penalty with following observations:-"In this case, the appellants are not challenging the demand of duty in respect of the inputs on which credit has been taken were found short. On verification, the appellant paid duty at the spot when the shortage was pointed out by the Revenue authorities. The explanation given by the appellant that due to pilferage and some inputs become sub-standard which were disposed of without reversing duty as the appellants were well aware of the provisions of Modvat Scheme that the credit is available only in respect of the inputs which are used in the manufacture of final product. The appellant cleared some of the inputs without reversing the credit which is admitted by the Chairman cum Managing Director. In these circumstances, I find no infirmity in the impugned order whereby the penalty is imposed. However, taking into the facts and circumstances of the case the penalty is reduced to Rs. 25,000/- otherwise impugned order is upheld. The appeal is disposed of as indicated above."

Appellant Contentions:-The Revenue submits that under Section 11AC of the Act, the penalty could not be less than the amount of duty.

Respondent Contentions:-The respondent, however, submits that the levy of penalty, in the present case, is not justified under Section 11AC of the Act but could be levied under Rule 173Q of the Central Excise Rules, 1944 under which the penalty is not minimum.

Reasoning of Judgment:-We have heard learned counsel for the parties. It is patent that the present case does not fall under Section 11AC of the Act which provides for minimum penalty. The penalty has been reduced by the Tribunal after recording a finding that on account of pilferage, some goods became sub-standard which does not show any deliberate mis-statement or concealment by the assessee. In the circumstances, no ground is made out for interference. The appeal is dismissed.

Decision:-Appeal dismissed.

Comment:- It is concluded from this case that penalty under section 11AC cannot be less than duty amount but in the present case, penalty is not imposable under section 11AC as there was no misstatement or concealment by the assessee and so in such circumstances only, penalty has been reduced.

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PJ/Case Laws/2012-13/1510

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