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Judgment
A. Selvam, J.—This Civil Miscellaneous Appeal has been directed against the order, dated 21-7-2009 in Final Order No. 725 of 2008 in Appeal No. E/443/2003 passed by the CESTAT, Southern Zonal Bench, Chennai. The respondent herein has been engaging the business of fireworks. During the years 1994, 1995 and 1996 the respondent has distributed some gift boxes even without paying duty. Under the said circumstances, show-cause notice, dated 7-9-1998 has been issued wherein the demand of duty, interest coupled with penalty are mentioned. The demand made in show-cause notice has been upheld in Order-in-Original, dated 24-5-1999 and the same has been agitated before the Commissioner of Appeals. The Commissioner of Appeals has dismissed the appeal filed by the respondent and subsequently, the respondent has filed Appeal No. E/443/2003 before the CESTAT.
The CESTAT, after hearing both sides, has allowed the appeal in part and set aside the demand made by the Department with regard to penalty and upheld the demand made with regard to duty and interest. Against the disallowed portion, the present Civil Miscellaneous Appeal has been preferred at the instance of the Department as appellant.
Even though the respondent has been served with summons, appearance has not been made. Under the said circumstances, the present Civil Miscellaneous Appeal is disposed of on merits on the basis of the contentions putforth on the side of the appellant.
At the time of admitting the present civil Miscellaneous Appeal, the following substantial question of law has been settled for consideration:-
"Whether the CESTAT is right in dismissing the appeal and vacating the mandatory penalties imposed when there is a plethora of conflicting decision on the same issue by various higher appellate forums/authorities?"
The learned counsel appearing for the appellant has meticulously drawn the attention of the Court to the provision of Section 11AC of the Central Excise Act, 1944 and the same deals with penalty in case of short levied or erroneously refunded or non-payment.
The present claim of penalty would come within the purview of non-payment.
It is seen from the records that the respondent has to pay Central Excise Duty in the years 1994, 1995 and 1996, but they paid duty only on 5-11-1997. Even though, the respondent has paid duty on 5-11-1997 and that too prior to issuance of show cause notice, dated 7-9-1998, the respondent cannot absolve its liability from paying penalty under the Section mentioned supra.
The CESTAT without properly considering the said provision has simply found that since before the issuance of show cause notice the respondent has paid Central Excise Duty, it need not pay penalty. Since the said Section deals with short levy or short payment or erroneous refund and non-payment, this Court is of the view that the approach made by the CESTAT with regard to penalty is totally erroneous and therefore, the order passed by the CESTAT is liable to be set aside and the substantial question of law settled in the present Civil Miscellaneous Appeal is having substance. In fine, this Civil Miscellaneous Appeal is allowed without costs and the Final Order No. 725 of 2008 in Appeal No. E/443/2003 passed by the CESTAT with regard to penalty is set aside. Consequently, connected Miscellaneous Petition is closed.