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TMI Blog2010 (9) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... dent in first four tax appeals. 4. For the sake of convenience, facts are taken from Tax Appeal No. 1131 of 2009. 5. It is the case of the appellant that the respondent assessee has cleared excisable goods without payment of duty in time. The delay in payment of duty in all these matters is about 25 to 56 days. Accordingly, show cause notices were issued for demanding Central excise duty under Section 11AC of the Central Excise Act, 1944 along with interest under Section 8(3) (sic) of the Act and penalty under Rule 25 of the Rules. The said show cause notice was adjudicated by the adjudicating authority and duty demand was confirmed and order was passed to recover interest under Rule 8(3) of the Rules and also imposed penalty of equal amount of duty demanded, under Rule 25 of the Rules. This amount of penalty is varied in all matters depending upon the quantum of duty as well as the period of default. 6. Being aggrieved by the orders passed by the adjudicating authority, the respondent challenged the said orders before the Commissioner (Appeals). The Commissioner (Appeals) confirmed the demand of duty as well as the interest as ordered in Order-in-original. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to pay the duty along with the interest after the specified date. The respondents have not followed either of the provisions of Rule 8 and have cleared the said goods without payment of duty, and thereby contravened the said Rule and attracted the exemplary penalty. He has further submitted that when the goods are deemed to be cleared without payment of Central excise duty, the penalty provision under the Central Excise law is applicable. It is submitted that the Tribunal has relied upon the decisions in the case of M/s. Condor Power Products P. Ltd., [2007 (210) E.L.T. 137 (Tri.-Delhi), M/s. Automotive India (Raipur) Pvt. Ltd., [2006 (203) E.L.T. 402 (Tri.-Delhi)] and CCE, Allahabad v. R.K. Cigarettes (P) Ltd., [2007 (79) RLT 804 (CESTAT - Delhi) = 2007 (213) E.L.T. 367 (T)] which are not applicable to the facts of the present case. He has further submitted that, in the present case, the respondents appears to be habitual offenders and are well aware that they would not be able to fulfill the obligations for payment of duty by the due date and hence, the respondents have contravened the provisions of Rule 25. He has further submitted that the Tribunal has erroneously come to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in case of Superintendent of Central Excise v. Sance Pharmaceuticals, 2009 (247) E.L.T. 136 (Ker.). [d] The decision in case of Union of India v. Rajasthan Spinning & Weaving Mills, 2009 (238) E.L.T. 3 (S.C.). 13. Based on the above factual as well as legal position, Mr. Dave has submitted that the appeals should not be admitted as no substantial question of law arises out of the impugned order of the Tribunal. 14. We have considered the rival submissions of the parties and have also gone through the orders passed by the authorities below. We have also gone through the relevant statutory provisions and the case law cited before us. 15. For appreciating the controversy between the department and assessee, it is necessary to have a close look at the relevant provisions of Central Excise Act as well as Rules. The dispute centers around the applicability of Rule 25 of the Central Excise Rules. It reads as under :- Rule 25. Confiscation and penalty. - (1) subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer,- (a) removes any exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Rule 25, keeping in mind the facts of the case, the Tribunal held that the invocation of Rule 25 for imposition of penalty for delayed deposit of duty is not in accordance with law. 17. It is also to be borne in mind that Rule 25 starts with the word "Subject to the provisions of Section 11AC............". Section 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty, has held that the learned single judge has correctly applied the law laid down by the Apex Court that penalty should not be imposed in absence of willful intention to evade payment of tax or duty, as the case may be. The Court further held that it is trite law that even the statute provides for imposition of penalty when there is failure to pay duty within the statutorily prescribed period, such imposition of penalty should be preceded by a finding that there was a willful default as such and in the case before the Kerala High Court, the deficit duty had been paid along with interest even before the issuance of the show-cause notice. The appellate authority had also found absence of any intention to evade payment of duty. The Court, therefore, took the view that the orders of penalty were not sustainable and rightly interfered with by the learned single judge. 20. Even in the case of Supreme Industries Limited v. CESTAT, New Delhi (supra), the Madhya Pradesh High Court took the view that enforcement of penal clause to be done subject to strict proof of intention to evade payment of duty. In the case before the Madhya Pradesh High Court, there was no material to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on a proper interpretation of Section 5 of Madras General Sales Tax Act, 1939, the expression "subject to" only means that the exemption under the licence is conditional upon the observance of the conditions prescribed and upon the restrictions which are imposed by and under the Act whether in the rules or in the license itself; that is, a licensee is exempt from assessment as long as he conforms to the conditions of licence and not that he is entitled to exemption whether the conditions upon which the license is given are fulfilled or not. The use of the words "subject to" has reference to effectuating the intention of the law and the correct meaning, is "conditional upon". The observance of conditions of licence is necessary for the availability of exemption under Section 5. Where the licensee contravenes the conditions of the licence or Act or the rules, he becomes liable to pay the tax, notwithstanding that a license is issued to him under Section 5. 24. In view of the above discussion and legal position emerging therefrom, we have no hesitation in confirming the orders passed by the Tribunal and dismissing all these Appeals filed by the Revenue, by holding that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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