By TIOL News Service

MUMBAI, APR 17, 2015 : THIS is a Revenue appeal and the issue involved in interpretation of s.77(1)(c)(iii) of FA, 1994.

The said sub-section reads -

SECTION 77. Penalty for contravention of rules and provisions of Act for which no penalty is specified elsewhere. -

(1) Any person,-

 

(a)xxx;

(b)xxx;

(c) who fails to-

(i) xxx; or

(ii) xxx; or

(iii) appear before the Central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an inquiry, shall be liable to a penalty which may extend to [ten] thousand rupees or two hundred rupees for every day during which such failure continues, whichever is higher, starting with the first day after the due date, till the date of actual compliance;

The Commissioner (Appeals)maintained the penalty imposed u/s 70 by the adjudicating authority, however penalty u/s 77 was reduced from 200/- per day per summons in respect of 4 summons to a fixed penalty of Rs.5000/- each against 4 summons and which comes to Rs.20,000/-.

He, inter alia , observed -

7. Under Section 70 ibid, the provision of the penalty are built in. But under section 77, the provision of imposition of penalty is flexible. Considering the nature of the service provided and the situation through which the service provider is passing, leniency is required to be shown. Moreover, I find that the appellants had already deposited an amount of Rs.20,000/- towards penalty vide Challan dated 31.03.2010. In view of the above, I order reduction of penalty to Rs.5000/- each against non appearance to summons dated 19.08.2008, 30.09.2008, 4.12.2008 and 18.1.2009 totally amounting to Rs. 20,000/-….

In appeal, the Revenue seeks enhancement of penalty to Rs.3,07,400/- at the rate of Rs.200 per summons from the date of summons till the date of compliance.

The AR submitted that there is no discretion available to the Commissioner (Appeals) to reduce the penalty imposed u/s 77(1)(c)(iii) of Finance Act, 1994and, therefore, the order be set aside.

The Bench extracted the findings given by the Commissioner(A) while reducing the penalty and observed that the same was satisfactory. After extracting the contents of s.77 of FA, 1994, the CESTAT observed -

+ From the above provisions, it is clear that the penalty of Rs.200 per day is not in the nature of mandatory. Therefore it is discretion of the officer to reduce the penalty depending upon the nature of the case. I therefore did not find any infirmity in the findings of the Ld. Commissioner (Appeals) given in the impugned order.

The Revenue appeal was dismissed.

(See 2015-TIOL-697-CESTAT-MUM)