COMMISSIONER OF CENTRAL EXCISE Vs. INDRAD AUTO LTD.

JUDGEMENT

(1.) HEARD both sides. In this case, the original authority has confirmed a duty demand of Rs. 70,376/ - and has imposed a penalty of Rs. 35,000/ - under Section 11AC of the Central Excise Act, 1944 apart from levying interest at the appropriate rate. Against the order of the original authority, both sides went in appeal to the lower appellate authority who has upheld the demand of duty but has set aside the penalty and interest leading to these appeals by the department. The ground taken by the lower appellate authority for setting aside the penalty and interest was that duty demanded was paid by the Respondent -Assessee before issue of the show -cause notice.

(2.) IN the light of the subsequent decision of the Hon'ble Supreme Court in Union of India v. Dharamendra Textile Processors : 2008 (231) ELT 3 (SC)], the ground of payment of duty before issue of SCN is not a valid ground for non -imposition of the statutory penalty equal to duty under Section 11AC and interest under Section 11AB. However, in the light of the decision of the Hon'ble Delhi High Court in the case of K.P. Pouches (P) Ltd. v. UOI, 2008 (229) ELT 31 (Del.), the Respondent -Assessee is entitled to determination of lower penalty equal to 25% of the duty amount subject to the condition that they have paid this amount within one month from the date of the order of adjudication along with duty and interest amounts.

(3.) SHRI Mohan, ld. consultant fairly states that the amounts of penalty and interest paid by them earlier have been refunded back to them subsequent to the impugned order of the lower appellate authority. He undertakes to deposit the said amounts within one month from today in compliance with our orders as above.