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2018 (7) TMI 2333 - HC - Central ExciseNon-quantification of interest and not giving option as per first proviso to Section 11AC (unamended) of the Central Excise Act, 1944 - failure to comply with the circular dated 22.5.2008 issued by the Central Board of Excise Customs - HELD THAT - It is quite vivid that the adjudicating authority while passing the order neither quantified the interest payable under proviso to Section 11B nor gave option to the petitioner to pay the reduced penalty in terms of first proviso to Section 11AC of the Act of 1944, which is in breach of the circular of the Central Board of Excise Customs and contrary to the judgment rendered by the Delhi High Court in K.P. Pouches (P) Ltd. 2008 (1) TMI 296 - DELHI HIGH COURT . In fact, the adjudicating authority ought to have quantified the statutory interest payable by the petitioner and further given option to the petitioner in the original order as mandatorily required by the judgment of the Delhi High Court in K.P. Pouches (P) Ltd. and later explained by the Central Board of Excise Customs. Thus, the order passed by the adjudicating authority non-quantifying statutory interest payable to the petitioner and not giving option to pay reduced penalty is held to be bad. The matter is remitted to the adjudicating authority who shall quantify the interest payable under Section 11B of the Act of 1944 by the petitioner and shall also give option to the petitioner to reduce penalty in terms of proviso to Section 11AC of the Act of 1944 - petition allowed.
Issues:
Challenge to order levying duty, interest, and penalty under Central Excise Act, 1944 based on non-compliance with circular and legal provisions. Analysis: 1. The petitioner challenged the order passed by the Adjudicating Authority, invoking the extraordinary jurisdiction of the Court. The order imposed duty, interest, and penalty for alleged fraud to evade Central Excise Duty, citing Section 11AC of the Central Excise Act, 1944. 2. The petitioner argued that the Adjudicating Authority failed to comply with a circular issued by the Central Board of Excise & Customs, as interpreted by the Delhi High Court in a previous case. The petitioner sought to set aside the part of the order not quantifying interest and not offering the option for reduced penalty under the first proviso to Section 11AC. 3. The respondents contended that the order was legally sound and warranted no interference, advocating for the dismissal of the writ petition. 4. After hearing both parties and examining the submissions and records, the Court proceeded to analyze the legal provisions in question, particularly Section 11AC of the Act, to understand the dispute. 5. The Court highlighted the importance of the first proviso to Section 11AC, as interpreted by the Delhi High Court in a previous case, emphasizing the necessity for the Adjudicating Authority to explicitly mention the options available to the Assessee under this section in the adjudication order. 6. Referring to a circular issued by the Central Board of Excise & Customs, the Court reiterated the mandatory requirement for the Adjudicating Authority to mention the provisions of the first and second provisos to Section 11AC in the Order-in-Original. 7. Additionally, the Court cited a judgment by the High Court of Gujarat, emphasizing the necessity for the Adjudicating Authority to calculate and mention the interest payable along with providing the option for reduced penalty, as per the legal provisions and circulars. 8. Based on the legal principles established by the Delhi High Court and the Gujarat High Court, the Court found that the Adjudicating Authority in the present case failed to quantify the interest payable and offer the option for reduced penalty, contrary to the legal requirements and circulars. 9. Consequently, the Court held the order invalid and remitted the matter back to the Adjudicating Authority. The Authority was directed to calculate the interest payable and provide the option for reduced penalty within a specified timeframe, ensuring compliance with legal provisions and previous judgments. 10. The Court allowed the writ petition to the extent indicated above, emphasizing the importance of adherence to legal requirements and circulars in matters concerning duty, interest, and penalty under the Central Excise Act, 1944.
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