ORDER
Jyoti Balasundaram, Vice-President
1. The Revenue is aggrieved by the order of the Commissioner of Central Excise (Appeals) imposing penalty of Rs. 15,000/- on the respondents herein, which amount is lesser than the duty of Rs. 1,85,348/- confirmed against them, on the ground that penalty of amount equal to duty should have been imposed in terms of Section 11AC of the Central Excise Act, 1944.
2. I have heard both sides.
3. The Revenue places reliance upon the decision of the Hon’ble Punjab & Haryana High Court in the case of CCE, Delhi-IV v. Illpea Paramount Pvt. Ltd. holding that once penal action is found to be warranted, quantum of penalty under Section 11AC is not at the discretion of the authorities and the same has to be equal to the amount of duty confirmed.
4. I find that in this case the entire duty amount was paid prior to the issue of show cause notice, albeit after detection of the case by the Central excise authorities. In these circumstances, the ratio of the judgment of the Hon’ble Bombay High Court in CCE v. Gaurav Mercantiles Ltd. , holding that the provisions of Section 11AC of the Central Excise Act, 1944 are not attracted on payment of duty prior to issue of show cause notice, is applicable on all fours to this case, and the assessees have also filed cross objections contesting their liability to penalty. Following the ratio of the Bombay High Court’s decision cited supra, I set aside the penalty imposed upon the assessees. Hence the question of considering any enhancement in the quantum of penalty does not arise.
5. The appeal is disposed of as above.
(pronounced in court on 31-1-2007)