Full Judgment
1. This is an appeal against the order of the Commissioner (Appeals) No.72/09 dt. 22.4.2009. Heard both sides.
2. Relevant facts, in brief, are that the premises of the appellants were visited by the officers on 23.1.2004 which revealed that appellants have manufactured and sold some quantity of unprocessed fabrics under the invoice of
M/s.G.M.Textiles which was a fictitious, non-existent unit. The proprietor of the appellant firm admitted the above and paid a sum of Rs.48,239/- on 27.1.2004. The original authority in pursuance of show-cause notice dt. 16.7.07 confirmed a demand of Rs.67,561/- along with interest and imposed penalty of equal amount under Section 11AC of the Central Excise Act read with Rule 25 of Central Excise Rules, 2002. He also appropriated the amount of Rs.48,239/- paid by the appellants during the course of investigation. The order of the original authority stands upheld by the Commissioner (Appeals).
3. Learned advocate for the appellant submits that the demand stands confirmed merely based on the statement of the appellant and the same may not be sustainable. Further, in the facts and circumstances of the case, no penalty should be imposed. He further submitted that even if penalty is to be sustained, no option has been given by the authorities below to pay reduced penalty of 25% of the duty involved in terms of proviso to Section 11AC and, therefore, they should be given the option now to pay the concessional penalty. In this regard, he relies upon the decision of the Hon’ble High Court of Delhi in the case of K.P.Pouches (P) Ltd. Vs UOI reported in 2008 (228) ELT 31 (Del.).
4. Ld. SDR reiterates the finding and reasoning of the Commissioner (Appeals).
5. I have carefully considered the submissions from both sides and perused the records. The investigation revealed that the appellants have used invoices of a fictitious firm to clear part of the goods manufactured by them. This fact stands admitted by the proprietor of the appellant firm. The same has been followed up by payment of substantial sum of Rs.48,239/- on 20.7.04. The statement has not been retracted. Under these circumstances, confirmation of demand of duty and imposition of penalty under Section 11AC cannot be faulted.
6. However, the submission of learned advocate that the authorities below have not given option to pay concessional penalty in terms of proviso to Section 11AC and, therefore, the same may be extended now by the Tribunal requires to be accepted in the light of a decision of the Hon’ble High Court of Delhi in the case of K.P.Pouches (P) Ltd. cited supra.
7. In view of the above, the appeal is disposed of as follows:-
a) The appeal is rejected upholding the demand of duty and imposition of penalty under Section 11AC.
b) However, the appellant is given an option to pay penalty of Rs.16,890.25 within 30 days from today. If the amount is not paid within the stipulated time, the penalty payable shall be Rs.67,561/.