- (1.) This appeal has been preferred under Section 35(G) of the Central Excise Act, 1944 against the order dated 24-2-2006 passed by Customs, Excise & Service Tax Appellate Tribunal, New Delhi proposing following substantial question of law: Whether the penalty under Section 11AC of Central Excise Act, 1944 is mandatory and equal to the duty demanded or the authority has discretion to impose lessor (sic) penalty?
(2.) Facts noticed by the Tribunal are that the assessee was consuming captively heavy petroleum stock/low sulphur heavy stock/residual fuel oil manufactured by them without payment of duty for the purpose of generating the electricity to be used and consumed by their manufacturing unit for manufacturing their final excisable products under notification No. 67/95-C.E.
(3.) The Department issued a show cause notice to the assessee proposing to deny the benefit of above notification on the ground that fuel were being used in generation of electricity, which was being consumed in the residential colony of the assessee as well in addition to being used in the manufacturing of final product, which was a condition for grant of exemption from duty. After adjudication demand of duty was confirmed and penalty was also imposed against which the appeal of the appellant was dismissed by the first Appellate Authority. The Tribunal upheld the imposition of duty following the judgment in case of the assessee i.e. Indian Oil Corporation v. CCE 2002 (148) E.L.T. 1021. The Tribunal, however, reduced the penalty after recording a finding that in the facts and circumstances of the case maximum penalty was not called far. No finding had been recorded by the Tribunal on the question raised on behalf of the appellant that there was intention to evade the payment of duty.;