Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
New Delhi dated the 15th September, 2009
Circular No. 898/18/09-CX
To,
Director General (All)
Chief Commissioners of Central Excise including LTU (All)
Commissioners of Central Excise (All)
Sir/Madam
Sub.:- Benefit of reduced penalty under provisos to Section 11AC- whether also
available at appeal stage- reg.
A case has been brought to the notice of the Board wherein a Commissioner
(Appeals) had allowed the benefit of proviso to Section 11AC of the Central
Excise Act, 1944 to pay penalty at the reduced rate of 25% within 30 days of the
communication of the Order in Appeal. Commissioner (Appeals) has read Section
11AC and Section 35 F together to arrive at the aforesaid decision.
- The matter has been examined. The provisions relating to reduction of penalty
to 25% are contained in proviso (1) to (4) of Section 11AC. In terms of proviso
(1) and (2), a penalty imposed under Section 11AC can be reduced to 25% on
fulfillment of following conditions.
- Duty determined under Section 11A(2) and interest payable thereon has been paid
within 30 days.
- The said period of 30 days is calculated from the date of communication of the
order passed by a Central Excise Officer determining the duty.
- The reduced 25% penalty is also paid within 30 days of the date of communication
of the order passed by the Central Excise Officer.
- From the above it is clear that in order to avail the benefit of 25% penalty,
the duty, interest and penalty are required to be paid within 30 days of
communication of the order passed by the adjudicating authority. Further, the
reading of proviso (4) would also support this interpretation because the said
proviso stipulate that wherever duty amount is increased at any appellate stage,
in that case in order to avail the benefit of 25 % penalty, the assessee is
required to pay differential amount within 30 days of the passing of the order
by the appellate authority. A combined reading of all the 4 proviso would,
therefore, make it clear that the benefit of 25% penalty is applicable only when
the assessee has paid duty, interest and the reduced penalty within 30 days of
communication of the order passed by the adjudicating authority. However, if the
penalty amount is increased at the appellate stage, in that case the 25% of
differential amount of penalty can be paid within 30 days of communication of
said appellate order. Therefore, the view taken by the Commissioner (Appeal) is
not as per the provision of law.
- Trade and Industry may be informed.
- Receipt of this circular may be acknowledged
- Hindi version would follow.
Yours faithfully,
(MADAN MOHAN)
Under Secretary to the Govt. of India
F. No. 4/2/2009-CX.1