ORDER
1. This appeal has been filed by the Revenue against the impugned order vide which the Commissioner (Appeals) has set aside the penalty on the respondents under Rule 26 read with Section 11AC of the Central Excise Act.
2. The controversy involved is as to whether the penalty could be set aside on the simple ground that the respondents deposited the duty before the issuance of the show cause notice or not.
3. The learned SDR has contended that since the payment of duty was not voluntary, it was rather on the demand raised by the Department, after the detection that the respondents had neither taken out the Central Excise Licence nor paid the additional duty on the goods manufactured and cleared by them. The penalty under Rule 26 read with Section 11AC could not be set aside against the respondents as confirmed by the adjudicating authority, by the Commissioner (Appeals) by following the ratio of law laid down in Ashok Leyland v. CCE, Chennai, 2003 (156) E.L.T. 995 (T) = 2003 (55) RLT 816, Amritsar Crown Caps (P) Ltd. v. CCE, Chandigarh, 2002 (140) E.L.T. 437, G.K. Steel (CBE) Ltd. v. CCE, Coimbatore, 2002 (53) RLT 1065 and CCE, Madurai v. Jkon Engg. P. Ltd., 2003 (151) E.L.T. 453 wherein it has been observed that no penalty is leviable where the assessee had deposited the duty before the issuance of the show cause notice. On the other hand, the learned Counsel has reiterated the correctness of the impugned order and contended that the penalty on the Director had already been imposed and as such, no penalty on the respondent company could be imposed. He has also contended that the penalty imposed by the adjudicating authority was under Rule 26 and not under Rule 25 and has got no relevance with the provisions of Section 11AC and as such, could not be even otherwise imposed.
4. I have heard both the sides and gone through the record. The perusal of the record shows that the respondents are engaged in the manufacture of fusible interlining cloth. They were liable to discharge the additional duty on it under the law. But they did not pay the same prior to the issuance of show cause notice in the present case. The Department even earlier to this, also issued show cause notice to them by invoking the extended period of time, when they detected that the respondents had neither taken the licence from the Department nor paid the additional duty on the goods. True that the respondents contested that show cause notice. The adjudicating authority when confirmed the duty demand against them on that show cause notice, the Commissioner (Appeals) however set aside the same by holding that the extended period was not invocable. But the fact remains that the respondents even at that time did not realise to pay the additional duty voluntarily. It is difficult to accept that after receipt of the earlier show cause notice, the respondents did not come to know that additional duty was payable by them. Moreover, ignorance of law is no excuse for evading the payment of duty. When the initial show cause notice was issued to them they could not consult their Consultant or the Counsel and take the legal advice. But they continued contesting that show cause notice. All these facts and circumstances had been virtually ignored by the Commissioner (Appeals) while setting aside the penalty under Rule 26 read with Section 11AC on the respondents. The payment of duty by the respondents in the light of these circumstances could not be said to be voluntary; rather they paid the duty when they were left with no option after having been proceeded against by the Department. Therefore, the ratio of law laid down in the above referred cases relied upon by the learned Commissioner (Appeals) could not be prima facie made applicable to the case of the respondents. Moreover, the Commissioner (Appeals) has himself upheld the confiscation of the goods as ordered by the adjudicating authority. He has even upheld the penalty on the Director of the respondents-company. After having so done, he could not legally, in my view, quash the penalty against the company. Keeping in view the facts and circumstances of the case, the penalty is leviable on the respondents company under Rule 26 read with Section 11AC. Therefore, the impugned order of the Commissioner (Appeals) which has been challenged in this appeal in this regard is liable to be set aside. However, at this stage the learned Counsel has contended that the respondents have no objection if penalty of a lesser amount than the amount equal to the amount of duty is imposed, keeping in view their conduct and ignorance and the fact that they had already paid the duty and their Director had also borne the penalty. In my view, the prayer of the learned Counsel deserves to be given due weight. Therefore, keeping in view the facts and circumstances detailed above and the fact that the duty had already been deposited by the respondents-company, besides penalty on their Director, the penalty under Rule 26 is reduced from Rs. 50,000/- as confirmed by the adjudicating authority to Rs. 10,000/-.
5. In the light of the discussion made above, the impugned order of the Commissioner (Appeals) regarding the penalty on the respondent-company stands accordingly modified. The appeal of the Revenue stands disposed of accordingly.