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2018 (5) TMI 1669 - HC - Central ExcisePenalty u/s 11AC - entire payment of disputed tax was paid by the appellant on or before passing of the order-in-original - Held that - It is accepted and admitted that the appellant herein did not pay the penalty imposed u/s 11AC of the Central Excise Act. Mere payment of differential duty, i.e. duty on the goods S.S. ingots found short by 4510 kg and S.S. flats found in the premises of M/s Shree Shyam Cutter and M/s Shree Ganesh Cutter would not matter once the conditions for imposition of penalty under Section 11AC was satisfied - the payment of duty, whether made before or after issuing of SCN, is not determinative and a relevant factor for deciding whether or not penalty should be imposed under Section 11AC of the Excise Act. This issue is to be decided having regard to the satisfaction or non-satisfaction of the conditions stipulated in Section 11AC of the Act. The appellant does not dispute and does not challenge the conditions mentioned in Section 11AC of the Act were satisfied as the appellant does not contest and submit that fraud, misrepresentation or suppression of facts in contravention of provisions of the Act or the Rules were missing and absent - also, appellant had not paid 25% of the penalty within the stipulated time of 30 days. Therefore, 100% penalty has to be paid by the appellant. Appeal dismissed - Decided against appellant-assessee.
Issues:
1. Levy of 100% penalty under Section 11AC of the Excise Act, 1944. 2. Justification of the addition of demands and adjudication order. 3. Payment of penalty under Section 11AC of the Central Excise Act. Levy of 100% Penalty under Section 11AC: The judgment revolves around the challenge to the order passed by the Customs, Excise and Service Tax Appellate Tribunal upholding the levy of a 100% penalty under Section 11AC of the Excise Act, despite the disputed tax being paid by the appellant before the order-in-original. The court referred to previous decisions, including the Supreme Court's ruling in Union of India v. Rajasthan Spinning and Weaving Mills and a Division Bench judgment in Commissioner of Central Excise Delhi-I v. Prabhat Zarda Factory (I) Private Limited. The court emphasized that the payment of differential duty does not absolve the liability for penalty under Section 11AC, as clarified in the Rajasthan Spinning and Weaving Mills case. Justification of Demands and Adjudication Order: The factual background involved a search operation revealing shortages and discrepancies in the appellant's manufacturing of S.S. ingots and S.S. flats. The appellant and related concerns were found to have cleared goods without duty payment, leading to show cause notices and subsequent orders confirming demands and penalties. The Tribunal affirmed these decisions with slight modifications in redemption fines and personal penalties imposed on individuals associated with the appellant. The court declined to interfere on the merits, noting that the Tribunal's findings were based on evidence such as statements recorded during the search. Payment of Penalty under Section 11AC: The court reiterated that the payment of duty, whether before or after the issuance of a show cause notice, does not affect the imposition of penalty under Section 11AC. The conditions for penalty under this section include fraud, misrepresentation, suppression of facts, and contravention of the Act and Rules. Quoting the Rajasthan Spinning and Weaving Mills case, the court clarified that once these conditions are met, the authority has no discretion to reduce the penalty below the determined duty amount. The appellant did not contest the fulfillment of these conditions, leading to the affirmation of the penalty by the court. In conclusion, the court dismissed the appeal, upholding the levy of 100% penalty under Section 11AC of the Excise Act based on the established conditions and legal precedents. The judgment highlights the importance of complying with statutory provisions and the non-negotiable nature of penalties once the necessary conditions are satisfied.
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