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CX – As there is no proceeding u/s 11A(1) against appellant, benefit of proviso to 11A(2) is not available to co-noticee – Penalty u/r 26 upheld: CESTAT

By TIOL News Service

MUMBAI, JULY 17, 2017: IN a CE case booked against M/s. Air Carrying Corporation (I) Pvt. Ltd. , the appellant was a co-noticee against whom penal provisions were invoked.

The demand of duty was confirmed and penalty was imposed against the main noticee. Penalty was also imposed on appellantu/r 26 of the CER.

Aggrieved,the appellant isbefore the Tribunal.

It is submitted that the main noticee, M/s. Air Carrying Corporation (I) Pvt. Ltd. had paid the entire duty along with interest and 25% of penalty within 30 days of the order and consequently, in terms of Section 11A(1A) of the CEA, 1944, the proceedings against the co-noticeeget abated.

And, therefore, the penalty imposed should be dropped as rule 26 of CER should be r/w Section 11A of the CEA, 1944.

The AR supported the order.

The Single Member Bench extracted the provisions of Section 11A(1A), (2) of the CEA, 1944 and observed -

4.1 It is seen that the proviso to sub-section (2) of Section 11A provides that if the main noticee has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such persons and such other persons to whom notices 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 matters stated herein.

Inasmuch as since in the instant case, there are no proceedings under sub-section (1) of Section 11A against the appellant, the benefit of proviso to sub-section (2) of Section 11A is not available to the appellant, the CESTAT held.

The appeal was dismissed.

Missed the bus -

++ By Notification No.  8/2016-CENT  dated 1.3.2016, the Central Excise Rules were amended to add a proviso after Rule 26(1):

Provided that where any proceeding for the person liable to pay duty have been concluded under clause (a) or clause (d) of sub-section (1) of section 11AC of the Act in respect of duty, interest and penalty, all proceedings in respect of penalty against other persons, if any, in the said proceedings shall also be deemed to be concluded .

++ Also see CBEC Circular No. 11/2016-Customs., Dated: March 15, 2016

++ Can proceedings against co-noticees be deemed to be concluded if main assessee pays duty, interest and penalty [ DDT 2110 ]

In favour:

++ 2013-TIOL-1048-CESTAT-DEL 

++ 2016-TIOL-28-CESTAT-MUM , 2013-TIOL-768-CESTAT-MUM , 2016-TIOL-855-CESTAT-MUM [All Single Member Bench decisions]

Contra view –

++ 2013-TIOL-26-CESTAT-DEL [SMB]

++ 2015-TIOL-756-CESTAT-MUM [SMB]

(See 2017-TIOL-2453-CESTAT-MUM)


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