ORDER
R.K. Abichandani, J. (President)
1. The Revenue has challenged the order of the Appellate Commissioner holding that no penalty was imposable on the appellant and setting aside the same on the ground that if duty amount was already deposited by the appellant on 13-1-2003, before the issuance of the show cause notice on 22-7-2003.
2. The adjudicating authority had disallowed Cenvat credit of Rs. 1,03,360/-, ordered its recovery from the respondent along with the interest and imposed penalty of Rs. 25,840/-, which was 25% of the duty amount. The adjudicating authority held:
Penalty of Rs. 25,840/- i.e. 25% of the duty amount had also been deposited on 29-7-2003 along with the interest of Rs. 7012/- vide TR-6 challan No. 5 dated 29-7-2003.
3. The penalty @ 25% appears to have been imposed by the adjudicating authority in view of the provisions of the first proviso to Section 11 AC, under which it was provided that where duty as determined under Sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under the same section shall be 25% of the duty so determined. The Revenue had not challenged this reduced penalty @ 25% which was imposed by the adjudicating authority. However, in the appeal which was filed by the assessee, the Commissioner set aside the penalty on the ground that the duty amount was earlier deposited prior to the issuance of the show cause notice.
4. In the above context, an identical issue had arisen in an appeal, being Excise Appeal No. 829 of 2004, and by order dated 17-11-2003 [2007 (211) E.L.T. 429 (Tri.-Del.)], it was inter alia held as under:
5. The contention raised on behalf of the revenue that an earlier deposit of Rs. 6,98,867/- cannot be considered to be a deposit made within 30 days of the order of adjudication is misconceived for the simple reason that though the amount was earlier deposited when the adjudication order determining the duty was made, it was ordered to be adjusted and therefore, it should be treated as a payment made within 30 days from the date of the commencement of the order. As regards the rest of the amount payable under the impugned order, the communication dated 17-12-03 and the copy of the TR-6 challan disclose that the entire duty as determined and interest payable duty were paid within thirty days of the communication of the adjudication order.
6.In the context of the above facts, the first proviso to Section 11AC of the said Act is reproduced below:
Provided that where such duty as determined under Sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section be twenty-five per cent of the duty so determined.
6.1 The first proviso to Section 11AC contemplates the penalty liability to be only of 25% of the duty determined in place of penalty equal to the duty determined. Therefore, in cases where the amounts are paid in accordance with the first proviso, there can arise no question of imposing penalty equal to the duty determined. That requirement stands substituted by the requirement of paying the penalty of 25% of the duty determined. The cases in which payments are made within 30 days as contemplated under the first proviso are treated differently in the matter of imposition of penalty by reducing the quantum of penalty to only 25% of the duty determined. The lenient treatment by such reduced liability to penalty is obviously adopted with a view to encourage quick payment of duty and interest amounts determined by the adjudicating authority.
7. For the foregoing reasons, the ratio of the decision in Illpea Paramount Pvt. Ltd, (supra) in which the first proviso to Section 11AC was never under consideration, can have no application. Even the decision of the Punjab & Haryana High Court in Machino Montell (I) Ltd. will have no application, since the facts in the present case merit reduced penalty under the first proviso to Section 11AC were never involved in that matter. It will be noted even under the second proviso to Section 11AC, it is clarified that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso which was admittedly done in the present case. Therefore, the penalty amount already paid up by the appellant being 25% of the duty determined along with all the other amounts within the period of 30 days warranted no further penalty on the appellant, as the question of penalty equal to the amount of duty cannot arise in such cases.
5. Following the ratio of the aforesaid Division Bench judgment, it is held that the Commissioner (Appeals) could not have set aside the penalty of 25% of the duty as imposed by the adjudicating authority under the first proviso to Section 11A of the Act. The impugned order of the Commissioner (Appeals), is, therefore, set aside and the order imposing penalty @ 25% on the present respondent stands restored. Since the penalty @ 25% of the duty amount was already deposited on 29-7-2003, as recorded in the order of the adjudicating authority, no question on its recovery can arise. The appeal is disposed of accordingly.
(Order dictated and pronounced in the open Court on 8-2-2007)