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2014 (8) TMI 572 - AT - Central ExciseImposition of penalty equivalent to duty demanded vide Section 11AC - Interest under Section 11AB - Held that - Respondent had paid the entire duty liability even before issue of the show-cause notice and following the decision of the Tribunal in the case of Rashtriya Ispat Nigam Ltd. Vs. CCE - 2002 (11) TMI 234 - CEGAT, BANGALORE and other decisions, set aside the penalty and interest - Supreme Court in the case of Union of India Vs. Rajasthan Spinning & Weaving Mills - 2009 (5) TMI 15 - SUPREME COURT OF INDIA held that penalty under Section 11AC of the Act cannot be set aside merely on the ground that the duty was paid before issue of show-cause notice. It has to be examined whether the conditions of penal liability as mentioned in Section 11AC of the Act is applicable or not. In view of the Hon ble Supreme Court s decision in the case of Rajasthan Spinning & Weaving Mills (supra), it is appropriate that the matter should be re-examined by the Commissioner (Appeals) on merits. Accordingly, the impugned order passed by the Commissioner (Appeals) is set aside and the matter is remanded to the Commissioner (Appeals) to decide afresh on merits after considering the various decisions on the issue including the decision of the Hon ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills (supra) - Decided in favour of Revenue.
Issues involved: Appeal against setting aside penalty and interest under Sections 11AC and 11AB of the Central Excise Act, 1944.
Analysis: 1. Imposition of Penalty and Interest: The Revenue filed an appeal challenging the Commissioner (Appeals)'s decision to set aside the penalty equivalent to duty demanded under Section 11AC and interest under Section 11AB of the Central Excise Act, 1944. The Commissioner (Appeals) based the decision on the respondent's payment of the entire duty liability before the show-cause notice was issued, citing precedents like the Rashtriya Ispat Nigam Ltd. case. However, the Hon'ble Supreme Court in the Union of India Vs. Rajasthan Spinning & Weaving Mills case clarified that penalty under Section 11AC cannot be set aside solely due to pre-payment of duty. The conditions of penal liability as outlined in Section 11AC must be assessed to determine applicability. Consequently, the Tribunal deemed it appropriate for the Commissioner (Appeals) to re-examine the matter on its merits, considering various decisions, including the Rajasthan Spinning & Weaving Mills case. The impugned order was set aside, and the case was remanded to the Commissioner (Appeals) for a fresh decision after due consideration, ensuring the assessee receives a fair hearing before the new order is passed. 2. Judicial Precedents and Re-examination: The Tribunal emphasized the significance of the Hon'ble Supreme Court's decision in the Rajasthan Spinning & Weaving Mills case in guiding the re-evaluation of the penalty and interest imposition. It directed the Commissioner (Appeals) to thoroughly review the matter in light of legal principles and precedents, ensuring a comprehensive assessment of the penal liability conditions under Section 11AC. The Tribunal's decision highlighted the need for a meticulous reconsideration of the case based on legal interpretations and relevant judgments, underscoring the importance of adhering to legal standards and principles in determining penalties and interest under the Central Excise Act, 1944. 3. Remand for Fresh Decision: By setting aside the Commissioner (Appeals)'s order and remanding the matter for a fresh decision, the Tribunal underscored the procedural fairness and the requirement for a detailed examination of the case on its merits. The directive for a re-examination by the Commissioner (Appeals) aimed to ensure a comprehensive review considering all legal aspects and precedents, particularly emphasizing the need to apply the principles elucidated by the Hon'ble Supreme Court in relevant cases. The Tribunal's decision prioritized a fair and thorough reconsideration process, emphasizing the importance of legal scrutiny and adherence to statutory provisions in determining penalties and interest under the Central Excise Act, 1944.
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