Mandatory penalty - duty paid before issue of Show cause Notice - Board communicates our orders
Is penalty payable even if the duty is paid before issue of Show Cause Notice? This was an issue that has been agitated quite for some time. CBEC has communicated to the field the ILPEA case which we reported in wherein the Tribunal held that ''once it is held that imposition of penalty under Section 11AC is warranted, the wordings of Section 11AC do not leave any option for imposing a reduced penalty, except as specifically provided for in the amended provisions of Section 11AC''.
The Board has also referred to our judgement in Commissioner of Central Excise & Customs, Aurangabad Vs M/s Padmasshri V V Patil Sahakari Sakhar karkhana Ltd () in which it has been decided that there is no discretion for reducing mandatory penalty under Section 11AC even if duty is paid before issue of Show Cause Notice.
While on this issue, please recall our article ERR (O) THO DARRO!
CBEC's No. F No 383/19/2007-JC Dated: August 2007