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Mr. Sanjeev Kaushik, learned counsel for the revenue has vehemently argued that provisions of Section 11 AC of the Act has now been interpreted by Hon'ble the Supreme Court in the case of Union of India v. Dharmendra Textile Processors 2008(231 )ELT 3(SC). According to the learned counsel a plain reading of 2nd proviso to Section 11 AC of the Act would make it clear that equal amount of duty found to be paid to the revenue is to be realised as penalty and therefore the amount of 25% imposed by the Tribunal as penalty is liable to be set aside.

The argument of the Revenue that the judgement in Dharmendra Textile Processor's case (supra) would apply and penalty equal to the amount of duty of excise assessed by the Assessing Authority is to be paid. We are afraid that such an argument would not be available because judgement in Dharmendra Textile Processor's case (supra) dealt with Section 11 AC of the Act and has concluded the mandatory nature of the penalty contemplated by the proviso . In para 26, reference has been made to the Union Budget of 1996-97, when Section 11 AC of the Act was introduced. It was then clarified that there was no scope for any discretion and the levy of penalty is of mandatory character. Hon'ble the Supreme Court further placed reliance on the Notes on Clauses concluding that similar indication has been given therein. It appears that provisos 1st and 2nd which were added in the year 2000 were not the subject matter of consideration before their Lordships in Dharmendra Textile Processors' case (supra). Therefore, we find no substance in the contention raised on behalf of the revenue especially in the face of express provision made by the four provisos in the year 2000.