V.K. Jain, Member (T)
1. Heard Shri S.P.Majumdar, ld. Advocate on the appeal filed by the appellants. This appeal has been filed against the Order-in-appeal No. 100/BBSR 11/04 dated 17.5.04 passed by the Commissioner of Central Excise (Appeals), Bhubaneswar.
2. Brief facts of the case are that the appellant is a manufacturer of refractory bricks and motor. It has been alleged that the appellant had removed 292.731 MT of steel scrap from their unit during November ’97 to March,2002 without payment of duty. The appellant had claimed exemption of duty on the goods, namely, steel clad, mould, plant and machinery, equipment, spares, pipeline for gas used captively under Notification No. 67/95 vide their classification declaration filed under Rule 173B of Central Excise Rules, 1944. The scrap generated during the manufacture of such items attract Central Excise duty at the rate of 16% adv. The fact of clearance of such scrap without payment of duty was detected during the course of audit on 30.3.2000. Accordingly, a show-cause notice was issued to the appellants for recovery of duty on such scrap cleared during the material period alongwith interest at the appropriate rate. The entire duty to the period from 1997-98 to 2001-02 and the interest of Rs.66,314/- relating to the period from 1999-2000 to 2000-01 has been paid. Hence the interest for the period 1997-98 to 1998-99 has been ordered for recovery alongwith penalty under Section 11AC of the Act by invoking the extended period under proviso to Sub-section 1 of Section 11A of the Central Excise Act. The Commissioner (Appeals) rejected the appeal filed by the appellants.
Hence the present appeal.
3. Ld. Advocate submits that the show-cause notice in this case was issued by the Department on 1.11.2002 demanding duty of Rs. 3,00,794/-under Section 11A alongwith interest and penalty under Section 11AB and Section 11 AC of the Central Excise Act. He submits that they have paid duty of Rs. 1,32,402/- at the time of clearance in 2001-2002 on the regular basis. Subsequently, on 16.1.02, they paid duty to the extent of Rs. 1,28,719/- alongwith interest of Rs.66,314/-. He submits that for the total demand of Rs. 3,00,794/-, the appellants have paid of Rs. 2,61,121/-before the issue of show-cause notice. The balance amount of Rs. 39,673/-was paid by them after the issue of show-cause notice but before the original adjudication order was passed. He relies on the Larger Bench’s decision of the Tribunal in the case of CCE, Delhi III, Gurgaon v. Machine Montell (I) Ltd. (LB) wherein it has been held that when the entire duty has been paid before the issue of show-cause notice, no penalty is imposable. The Hon’ble Supreme Court has upheld this view of the Tribunal in the case of Rastriya Ispat Nigam Ltd. reported in 2004 (163) ELT A53 (SC), He further submits that Section 11 AC of the Central Excise Act, 1944, provides that where the duty and interest payable has been paid within 30 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 shall be 25% of the duty so determined. He submits that the appellants have paid more than 80% of the total duty before issue of show-cause notice and only less than 20%, they paid after after the issue of show-cause notice but before the Order-in- Original was passed. He submits that Section 11 AC provides that the penalty imposed cannot be more than 25% of the duty which they paid subsequently i.e. Rs. 39,673/-. However, the fact remains that they have paid the entire amount of duty before the adjudication order was passed by the lower authority and as such no penalty can be imposed on them in view of the Hon’ble Apex Court’s decision and the Larger Bench’s decision referred to above. He further submits that this Bench in the case of CCE, Patna v. Prabhat Zarda Factory (I) Ltd. reported in 2005 (66) RLT 516 (CESTAT-Kol.) has held that the amount of duty paid prior to determination thereof, the interest not leviable and hence the appellants are not liable to pay any interest after the payment of duty by them. The interest, which has been leviable before the demand of duty, has already paid by the appellants. In view of this, he submits that their appeal be allowed.
5. Heard Shri Uday Kumar, ld. JDR for the Revenue. He reiterates the findings of the lower authority and the Commissioner (Appeals).
6. I have heard both sides. This is a fact that the appellants have paid an amount of Rs. 2,61,121/- before the issue of the show-cause notice out of total demand of Rs. 3,00,794/-. After the issue of show-cause notice, the appellants have paid the balance amount of Rs. 39,673/-. The Hon’ble Apex Court has already held that where duty has been paid before the issue of show-cause notice, no penalty is imposable. In this case, it is a fact that the entire amount of duty has not been paid by the appellants. An amount of Rs. 39,673/- has been paid after the issue of show-cause notice but much before the adjudication order was passed. Even if, I take into consideration the Section 11AC of the Central Excise Act, where duty has been paid within 30 days of the issue of show-cause notice, the amount of penalty liable to be paid by such person under this Section shall be 25% of the duty so determined. In this case, the appellant have been paid an amount of Rs. 39,673/- after the issue of show-cause notice but before the adjudication order was passed. In any case, the appellant is entitled to get the benefit of the ratio laid down by the Hon’ble Supreme Court and the Larger Bench and the penalty which can be imposed on the appellants will be 25% of Rs. 39,673/-. In view of this, I reduce the penalty to Rs. 9918/-Rupees nine thousand nine hundred eighteen only). Appeal filed by the appellants is disposed of in the above terms.
Dictated and Pronounced in the open Court.