Commissioner of C. EX. and CUS. vs Wipro Ltd.

Heard Learned Counsel for the parties.

This Appeal filed by the revenue, raises the following question of law.

Whether the adjudicating authorities have any discretion of imposing lesser penalty or to reduce penalty u/s 11AC than the amount of duty determined u/s 11A of the Central Excise Act, 1944?

We have perused the order passed-by the Tribunal dated 5-2-2008 ( 2008 (127) ECC 182 ). By this order, the Tribunal has rejected the Appeal filed by the Appellant/Revenue and confirmed the order passed by the Commissioner (Appeals).

We have perused the impugned orders. It appears, even after holding that the allegations made in the impugned show cause notice, regarding suppression and intention to evade the duty, are established beyond any doubt, the penalty has been reduced to Rs. 35,000/- only on the ground that the duty with interest was paid by the Respondent-Assessee within the time stipulated in the first proviso to Section 11AC of Central Excise Act, 1944.

In so far as issue of suppression and intention to evade the duty is concerned, we have perused all the three orders, so also the show cause notice and we find that there is sufficient material on record to sustain the findings of fact on this issue and in any case, these findings cannot be termed as perverse. Thus we do not see any reason to interfere with the same.

The first proviso to Section 11AC provides that where duty as determined under Sub-section (2) of Section 11A and the interest payable thereon u/s 11AB is 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 be 25% of the duty was determined. There is no dispute that in the present case, the duty determined under Sub-section (2) of Section 11A and the interest u/s 11AB was paid by Respondent-Assessee, However, the penalty was not paid within the period of 30 days referred to in the first proviso. In view, thereof, Learned Counsel for the Appellants submitted that the provisions of the second proviso to Section 11AC are attracted and, therefore, the Respondent-Assessee is liable to pay the, penalty equal to the duty as contemplated u/s 11AC. In other words, she submitted that in view of the admitted fact that the Respondent-Assessee did not pay the penalty within the time stipulated in the second proviso, the adjudicating authorities had no discretion of imposing lesser penalty or to reduce the penalty u/s 11AC than the amount of duty determined u/s 11A of the Central Excise Act, 1944. It is thus clear that reduction of penalty without verifying whether the penalty was paid within 30 days, as contemplated by the second proviso, was wrong and illegal and hence deserves to be set aside.

For the reasons discussed above, we set aside the judgment and order passed by the Tribunal and the Commissioner (Appeals). We answer the question raised in this Appeal in the negative i.e. in favour of the Appellant-revenue and against the Respondent-Assessee.

In the result, the Appeal is allowed but with no order as to costs.