Full Judgment
2. The relevant facts that arise for consideration are that the factory premises of the respondents were visited by the preventive staff and documents were seized. On the scrutiny of the documents, it was noticed by the officers that the respondent had availed Modvat credit on some of the documents under which no inputs could be received by them. On being pointed out by the officers, the respondent deposited the entire amount of Cenvat credit. Show cause notice was issued to the respondent which was adjudicated by the adjudicating authority and the amount of duty demanded was confirmed and amount paid by the respondents was appropriated. In addition to the appropriation, the adjudicating authority imposed penalty and also sought interest. The respondent deposited the entire amount of interest involved on such demand and also 25% of the amount of penalty as per the proviso to Section 11AC of Central Excise Act, 1944. After doing so, the appellants filed appeal before the Commissioner (Appeals) who set aside the penalty and interest on the appellants.
3. The learned DR submits that setting aside of interest and penalty by the Commissioner relying upon the decision of the Larger Bench of the Tribunal in the case of Machino Montell is not correct in as much as, the said decision of the Tribunal is now declared as not a correct law by the High Court of Punjab & Haryana.
4. The learned Counsel submits that they have already deposited the entire amount of interest and penalty within 30 days of the order. If that be so, there is no requirement for them to pay entire amount of penalty.
5. Considered the submissions and perused the record. I find that the respondent has not challenged the duty amount and interest amount which has been paid. The question before me is whether the respondent has to deposit entire amount of penalty as pleaded by the learned SDR.Provisions of Section 11 AC read as under: Section 11AC. Penalty for short-levy or non-levy of duty in certain cases - Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under Sub-section (2) of Section 11A shall also be liable to pay a penalty equal to the duty so determined: Provided that where such duty as determined under Sub-section 11 A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise officer determining such duty, the amount of penalty liable to be paid by such person under this section be twenty-five per cent of the duty so determined: Provided further the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or as the case may be, the court, then, for the purposes of this section, the duty as reduced or increased, as the case may, shall be taken into account: Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect.
6. From the plain reading of the above reproduced provisions of Section 11 AC, it is very clear that once the assessee deposits the duty, interest and 25% of the penalty, nothing more survives and they cannot be visited with entire amount of penalty.
7. Accordingly, I do not find any merit in the appeal field by the Revenue as regards imposing of equal amount of penalty. Since the respondent has not challenged the interest and 25% of penalty, that part of the order has attained finality. In view of the above, appeal filed by the Revenue is dismissed. The impugned order is modified in the above terms.