Violation of Section 11AC of CEA: CESTAT Orders to Pay 25% of Penalty within 30 days from date of Communication of Order [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered to pay 25% of penalty within 30 days from date of communication of order for violation of Section 11AC of the Central Excise Act, 1944 (CEA) by the Adjudicating Authority.

2088 Kgs of “Gul” valued at Rs.2,67,890/- were seized from the Appellant partnership firm known as Noor Md. & Brothers. Show Cause Notice was issued to the Partnership firm seeking to know as to why the seized goods should not be confiscated and penalties should not be imposed on the firm. The Show Cause Notice was also issued to the partner Moinuddin Ansari seeking to know as to why penalty should not be imposed on him.

After due process, the Adjudicating Authority passed an order wherein there was confiscation of the seized goods and imposed redemption fine of Rs. sixty seven thousand and also imposed penalty of Rs.2 lakhs on the partnership firm in terms of Rule 25 (1)(c) of CER Rules, 2002 read with Section 11 AC of the CEA, 1944. The Authority also imposed personal penalty of Rs.2,09,704 on the partner Mr. Moinuddin Ansari.

The Counsel for the appellant contended that the partnership firm is contesting the penalty imposed under Section 11 AC of CEA for amount of Rs.2 lakhs. He submits that the Adjudicating Authority was bound to give an option of paying the penalty @ 25% if the duty with interest was paid within 30 days from the date of communication of the OIO.

The Counsel further submitted that the Excise Duty was paid in the normal course itself and no amount on account ofinterest is payable therefore, if the option was given to them to pay the penalty @ of 25%, the penalty would have paid and closed the issue.

With regard to the personal penalty of Rs.2,09,704/- on Moinnudin Ansari, the Counsel submitted that as the penalty has already been imposed on the Partnership firm, the Adjudicating Authority is in error in imposing separate penalty on partner.

The Tribunal of R. Muralidhar Member (Judicial), observed that “It is seen that the Adjudicating Authority has not given the option of payment of penalty @ 25% which he was required to do.The confirmation of Rs.2,09,704/- as Excise Duty to be paid as held by the Adjudicating Authority is infructuous and is set aside.I give an option to the Appellant to pay 25% of Rs.2,09,704/- as penalty. The Appellant should pay the same within the 30 days from the date of communication of this order.”

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