M/S. Iyappan Engineering Ind. Pvt. Ltd. Vs. Commissioner of Central Excise (Appeals), Chennai - Court Judgment

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CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Chennai
Decided OnJan-03-2014
Case NumberE/00384 of 2005 [Arising Out of Order-in-Appeal No.07 of 2005 (M-II), dated 16.02.2005 passed by the Commissioner of Central Excise (Appeals), Chennai]
JudgeTHE HONOURABLE MR. P.K. DAS, JUDICIAL MEMBER
AppellantM/S. Iyappan Engineering Ind. Pvt. Ltd.
RespondentCommissioner of Central Excise (Appeals), Chennai
Excerpt:
1. the relevant facts of the case in brief are that the appellants are engaged in the manufacture of machinery components falling under chapter 84, 87 and 90 of the central excise tariff act, 1985.  they have removed the used duty paid machinery to the sister concern upon payment of duty under transaction value.  subsequently, the audit party examined this issue and after thorough investigation it was found that the appellant is liable to pay duty on depreciated value.  accordingly, they have paid the duty on the depreciated value as per the observation of the audit.  by the adjudication order, the adjudicating authority demanded interest under section11ab of the central excise act, 1944 and also imposed penalty of rs.1,65,044/- equal amount of duty under rule 57u of the erstwhile central excise rules, 1944 read with section 11ac of the central excise act, 1944.   commissioner (appeals) upheld the adjudication order. 2. the learned counsel on behalf of the appellant submits that they have already deposited the entire amount of  interest and also penalty.  he submits that the adjudicating authority had not given any option for payment of penalty of 25% of the duty as required under provision of section 11ac of the central excise act, 1944.  he relied upon the decision of the gujarat high court k.p. pouches (p) ltd. vs union of india reported in 2008 (228) e.l.t.31 (del.). 3. after considering the submissions of both sides, i find that the appellant is not contesting duty and interest, which were deposited before issue of the show-cause notice. i agree with the submission of the learned counsel of the  appellant that the applicant should be given an option to pay penalty 25% of the duty within the stipulated period under section 11ac of the act. i uphold the adjudication order insofar the imposition of penalty under section 11ac of the act.  however, respectfully following the decisions of the honble high court as referred above, as the  applicant already deposited the entire amount of duty before issue of show-cause notice and also paid interest, in view of that penalty is reduced to 25% of the duty as per provision of section 11ac of the act, which has already been deposited by the appellant.  the appeal is disposed in the above terms.  the appellant is eligible for consequential relief, if any.
Judgment:

1. The relevant facts of the case in brief are that the appellants are engaged in the manufacture of machinery components falling under Chapter 84, 87 and 90 of the Central Excise Tariff Act, 1985.  They have removed the used duty paid machinery to the sister concern upon payment of duty under transaction value.  Subsequently, the audit party examined this issue and after thorough investigation it was found that the appellant is liable to pay duty on depreciated value.  Accordingly, they have paid the duty on the depreciated value as per the observation of the audit.  By the adjudication order, the adjudicating authority demanded interest under Section11AB of the Central Excise Act, 1944 and also imposed penalty of Rs.1,65,044/- equal amount of duty under Rule 57U of the erstwhile Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944.   Commissioner (Appeals) upheld the adjudication order.

2. The learned Counsel on behalf of the appellant submits that they have already deposited the entire amount of  interest and also penalty.  He submits that the adjudicating authority had not given any option for payment of penalty of 25% of the duty as required under provision of Section 11AC of the Central Excise Act, 1944.  He relied upon the decision of the Gujarat High Court K.P. Pouches (P) Ltd. Vs Union of India reported in 2008 (228) E.L.T.31 (Del.).

3. After considering the submissions of both sides, I find that the appellant is not contesting duty and interest, which were deposited before issue of the show-cause notice. I agree with the submission of the learned Counsel of the  appellant that the applicant should be given an option to pay penalty 25% of the duty within the stipulated period under Section 11AC of the Act. I uphold the adjudication order insofar the imposition of penalty under Section 11AC of the Act.  However, respectfully following the decisions of the Honble High Court as referred above, as the  applicant already deposited the entire amount of duty before issue of show-cause notice and also paid interest, in view of that penalty is reduced to 25% of the duty as per provision of Section 11AC of the Act, which has already been deposited by the appellant.  The appeal is disposed in the above terms.  The appellant is eligible for consequential relief, if any.