CX - Co-appellant cannot be exonerated from penalty imposed u/r 26 of CER, 2002 even if main appellant has paid duty, interest and 25% of penalty in terms of proviso to Sec11A(2) - Immunity is available to only those persons to whom notice is issued u/s 11A(1): CESTAT
By TIOL News Service
MUMBAI, APR 29, 2015: AGAINST the O-in-A passed by the Commissioner (A) upholding the imposition of penalty of Rs. 50,000/- u/r 26 of the CER, 2002, the appellant is before the CESTAT.
The short issue involved is whether the penalty u/r 26 on the co-appellant can be waived if main appellant against whom duty interest and penalty has been confirmed, has paid duty, interest and 25% penalty in terms of proviso to Section 11A(2) of the CEA, 1944.
The appellant had filed written submissions and requested that the case be decided on merits.
The AR while reiterating the findings of the O-in-A submitted that appellant as co-noticee was imposed penalty of Rs. 50,000/- u/r 26 of CER, 2002 whereas immunity is granted to only those ‘other persons' who have been issued notice under Section 11A(1) of CEA, 1944 and, therefore, the interpretation of proviso by the appellant is misleading and no immunity under proviso to Section 11A(1A) can be granted to the appellant. Reliance is placed on the decision in Commissioner of Central Excise, Raipur vs. Anand Agrawal - 2013-TIOL-26-CESTAT-DEL.
The proviso to section 11A(2) of the CEA, 1944 read -
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Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of Section 9, 9A and 9AA, be deemed to be conclusive as to the matter stated therein:
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The Single Member Bench considered the submissions made and observed -
"…From the aforesaid proviso, it is very clear that the immunity provided under the proviso is available to only those persons to whom the notice is issued under Section 11A(1A). In the present case penalty on the appellant was proposed in the notice and imposed in the impugned order under Rule 26 of Central Excise Rules, 2002. Therefore the appellant is not covered under the category of the “other persons" as mentioned, under the proviso. Therefore in my view the immunity provided under the proviso is not applicable to the present appellant. From the said proviso, I am of the opinion that the term “person" and “any other persons" used in the proviso under Section 11A(2) means if in any case in the common show cause notice, if the duty demand was raised against more than one person under Section11A(1A) and duty, interest and 25% of penalty proposed in the show cause notice is paid by both the person then against those both the persons proceedings will stand concluded, but if any other person on whom only penalty under Rule 26 of Central Excise Rules, 2002, or any other person is proposed then the proviso to Section 11A(2) is not applicable. I find, that the judgments of Coordinate Bench of this Tribunal in the case of Commissioner of Central Excise, Raipur vs. Anand Agrawal (supra) squarely applicable in the present case. The relevant portion of the decision is reproduced below:
x x x
From the above findings of Anand Agrawal case, it is crystal clear that person on whom the penalty under Rule 26 was imposed is not entitled for the immunity provided under proviso to Section 11A(2). However, considering the fact that total amount of duty confirmed is Rs. 2,79,803/- and also on the fact that entire duty, interest and 25% of penalty has been paid by the main appellant. I am of the view that the personal penalty of Rs. 50,000/- imposed on the appellant is higher side, therefore, I reduce penalty of Rs. 50,000/- to Rs. 25,000/-…."
The appeal was partly allowed.
In passing : Also see 2013-TIOL-768-CESTAT-MUM, 2013-TIOL-1048-CESTAT-DEL & 2014-TIOL-397-CESTAT-MUM & Can proceedings against co-noticees be deemed to be concluded if main assessee pays duty, interest and penalty (DDT 2110)
(See 2015-TIOL-756-CESTAT-MUM)
