AVERY CYCLES INDS. LTD. Vs. C.C.E.

JUDGEMENT

(1.) THIS appeal has come up for hearing by order of remand made by the Hon'ble High Court of Punjab & Haryana by setting aside the order of the Tribunal made on 24.6.04 only to the extent of reducing the penalty to Rs. 25,000/ -. The case is remanded for a fresh decision on the question of penalty. While making the remand, the Hon'ble High Court observed that the only contention raised for the revenue was that the penalty of Rs. 25,000/ - was imposed by the Tribunal though the penalty specified under the statute provision of Section 11AC of the Central Excise Act,44 had been interpreted by the Hon'ble High Court of Punjab & Haryana to mean minimum penalty in Commissioner of Central Excise, Delhi v. Illpea Paramount Pvt. Ltd. reported in 2006 (77) RLT. 118.

(2.) BY the Order -in -Original dt. 15.11.03, the Commissioner had confirmed the demand of Rs. 6,71,829/ - under Section 11A by invoking the provisions of extended period, disallowed the Modvat credit amounting to Rs. 27,038/ -, ordered recovery of interest under Section 11AB of the Act read with the relevant rules, and imposed penalty of Rs. 6,98,867/ - under Section 11AC of the Act read with the relevant rules. The Tribunal noticing that the appellant had not challenged the confirmation of demand and disallowance of the Modvat credit and observing that they had paid up the appropriate duty when they deducted the amount, held that it is not a fit case for warranting imposition of 100% penalty. The penalty was, therefore, reduced from Rs. 6,98,867/ - to Rs. 25,000/ -. We, therefore, are required to reconsider the question of a penalty in the light of the decision in CCE, Delhi v. Illpea Paramount Pvt. Ltd. which interpreted the provision of Section 11AC as prescribing minimum penalty. In fact, under the impugned order, the Hon'ble High Court only referred the contention raised by the learned DR for the revenue in question in the said decision in Illpea Paramount Pvt. Ltd. and remanded the case for a fresh decision.

(3.) THE learned authorized representative for the department on the other hand submitted that the proviso to Section 11AC contemplated the deposit being made after the determination of duty under Section 11A(2) and therefore the amount earlier paid during the pendency of the proceedings (Rs. 6,98,867/ - cannot be considered to be payment of duty as determined by the order which was made subsequently on 15.11.03. It was also submitted that minimum penalty was required to be upheld in view of the decision of the Punjab & Haryana High Court in the case of Illpea Paramount Pvt. Ltd. (supra) and CCE, Delhi v. Machino Montell (I) Ltd. reported in . It was submitted that it is clear from the order of remand that the Hon'ble High Court has not given a direction that minimum penalty alone should be imposed. In the present case, the undisputed facts disclose that the appellant had deposited the entire amount of duty and the interest payable thereon within 30 days from the date of the communication of the order of adjudication. From the letter dated 17.12.03 addressed by the appellant to the Dy. Commissioner, it transpires that the appellant had informed the Dy. Commissioner that as mentioned in the order of the adjudication itself, the amount of Rs. 6,98,867/ - had already been deposited. It was also stated that the appellant had deposited a sum of Rs. 6,81,437/ - on account of interest for a delayed deposit and an amount of equal to 25% of the amount confirmed as duty. Interest, and penalty equal to 25% of duty were deposited as per the copy of TR -6 Challan which was enclosed alongwith the said communication. It was finally submitted that since the entire amount has been deposited including penalty as reduced by the provisions of Section 11AC, no recovery was due from the appellant.