Tata Cummins PVT. LTD. vs. Superintendent, Central GST, Range-Iv, Lonand And Ors

Held

The Court held that in the peculiar facts of the case, the petitioner should receive the benefit of reduced penalty. The Court found that the petitioner's intention was not to challenge the order, and the shortfall of Rs. 18/- was due to an oversight, being a minuscule amount. The Court reasoned that it would be a travesty of justice to make the petitioner liable for the remaining 75% penalty due to such an unintended oversight, especially when the statute aims to reduce litigation by offering a waiver upon prompt voluntary deposit. While acknowledging the mandatory nature of the 30-day period as per the decision in Castrol India Ltd., the Court distinguished that case by noting the assessee had disputed the penalty. The Court found support in the Gujarat High Court's view in Banian & Berry Bearing Pvt. Ltd. that minor lapses should not attract penal consequences. Consequently, the impugned communications were set aside, and it was declared that the petitioner would not have to pay any further penalty.

Facts

The petitioner, Tata Cummins Pvt. Ltd., was issued a show-cause notice by the Excise Department, which resulted in a confirmed demand, including a penalty of Rs. 2,28,302/- under Section 11AC of the Central Excise Act, 1944. As per the provision, paying 25% of the penalty within 30 days of receiving the order would waive the remaining 75%. The Joint Commissioner quantified this 25% at Rs. 57,076/-. The petitioner deposited Rs. 57,058/- within the stipulated period, falling short by Rs. 18/-. Upon being informed, the petitioner promptly deposited an additional Rs. 20/-. However, the department, by a communication dated 17.10.2017, rejected the request for reduced penalty, citing non-payment of the full 25% within the mandatory 30-day period.

Key Issues

1. Whether the petitioner is entitled to the benefit of reduced penalty under Section 11AC of the Central Excise Act, 1944, despite a shortfall of Rs. 18/- in the 25% penalty amount deposited within the 30-day period? The petitioner argued that their intention was never to challenge the penalty order, and they had submitted to it by paying the duty and 25% of the penalty, with the shortfall being minuscule and due to an oversight. They contended that imposing the remaining 75% penalty would be a travesty of justice and contrary to the legislative intent of avoiding further litigation. They relied on the Gujarat High Court's decision in Banian & Berry Bearing Pvt. Ltd. Vs. UOI, which suggested that marginal delays in payment should not attract penal consequences. The respondent revenue contended that the 30-day period for depositing 25% of the penalty is mandatory, as held by this Court in Commissioner of Central Excise, Raigad Vs. Castrol India Ltd.