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TMI Blog2012 (12) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... evasion of duty - this is not a case where the penal provisions can be upheld or that where the penalty can be imposed - provisions of Section 11AC are para-materia to the provisions of Rule 25(1)(d) so far as the contravention of any of the provisions of Rules with intent to evade payment of duty is concerned - penalty is not imposable under Rule 25 – in favor of assessee - E-410/2006 - A-169/KOL/2012 - Dated:- 26-3-2012 - S/Shri B.S.V. Murthy, Ashok Jindal, Shri S.K. Gaule, JJ. REPRESENTED BY : Shri S. Mishra, Addl. Commissioner (AR), for the Appellant. Shri N.K. Chowdhury, Advocate, for the Respondent. [Order per : Ashok Jindal, Member (J)]. Heard both sides. The Revenue has filed an appeal against the order of dropping the penalty. 2. The facts are that a show-cause notice was issued to the respondent on the ground that they have contravened the provisions of Rules 4 8 of the Central Excise Rules, 2002 as they discharged their Central Excise duty liability of clearance of vegetable products from their factory during the period from June, 2003 to May, 2004 by utilizing the accumulated credit in their RG 23B Part II with the reference to Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that there is no wilful mis-statement or evasion of duty and dropped the penalty, but when the respondent has contravened the provisions of Rules/laws/Acts and evaded payment of duty, in that case penalty under Rule 25 is imposable. Though the Commissioner has not levied penalty under Section 11AC of the Act, but under Rule 25, penalty is leviable and he reiterated the grounds of appeal also. 5. On the other hand, the ld. Advocate for the respondent submitted that in this case, the Commissioner has dropped the penalty as he has not found that the respondent has evaded payment of duty by way of fraud, wilful mis-statement, suppression of facts or contravention of provisions of law/rules with intent to evade duty and the said finding of the Commissioner has not been challenged by the Department by way of this appeal. Therefore, penalty under Rule 25 cannot be levied as Rule 25 prescribed that the penalty is levied subject to the provisions of Section 11AC of the Act. Therefore, the finding of the Commissioner is that there is no case of fraud, wilful mis-statement, suppression of facts or contravention of provisions of law/rules with intent to evade duty. In the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11A, shall also be liable to pay a penalty equal to the duty so determined. Now from the plain reading of Section 11AC of the Act, we find that the penalty can be levied for the following occasions : if the duty is not levied by way of fraud, collusion, wilful mis-statement or suppression of facts or contravention of provisions of the law/rules/ Act with intent to evade duty; If the abovesaid ingredients are available, then penalty under Section 11AC is imposable, which has been held by the Hon ble Apex Court in the case of Union of India v. Rajasthan Spinning and Weaving Mills reported in 2009 (238) E.L.T. 3 (S.C.) and to impose penalty under Rule 25. Ingredients of Section 11AC are to be complied with as held by the Hon ble High Court of Gujarat in the case of Commissioner of Central Excise Customs v. Saurashtra Cement Ltd. reported in 2010 (260) E.L.T. 71 (Guj.), Commissioner of Central Excise v. Tripura Containers Pvt. Ltd. reported in 2011 (264) E.L.T. 339 (Guj.), Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, penalty was levied under Rule 25. In the case of Commissioner of Central Excise Customs, Surat-I v. Rajhans Silk Mills reported in 2011 (268) E.L.T. 327 (Guj.), the Hon ble High Court of Gujarat without reference made to them held that when the Tribunal has imposed penalty by attracting the provisions of Section 11AC of the Act and has reduced penalty to 25% of the duty, in fact before the Hon ble High Court, the issue was not that if the penalty under Section 11AC has been dropped in that case, penalty under Rule 25 of Central Excise Rules, 2002 can be imposed or not. Therefore, the said case law is not applicable to the facts of this case. 7. In this case, it is clear that while passing the impugned order, the Commissioner has clearly held that there is no wilful mis-statement, fraud or found any contravention of evasion of duty and there is no suppression of facts also. In that case, the penalty was dropped. The Department has not challenged the findings of the Commissioner on the issue. Therefore, without complying the provisions of Section 11AC, the penalty under Rule 25 of the Central Excise Rules, 2002 is not imposable. 8. With the above observations, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention to evade duty. 15. Since violation of Rules with intention to evade duty is what is required, penalty can be imposed under Rule 25 even if the Commissioner has taken a view that Section 11AC is not attracted. Further Revenue is also not aggrieved with this observation. It was submitted very vehemently that the provisions of Rule 25 are subject to the provisions of Section 11AC and therefore once there is no liability to penalty under Section 11AC, no penalty can be imposed under Rule 25. Even though several decisions have been cited and taken note of by the learned brother, in my opinion the two latest decisions only are required to be considered by following the later the better principle. In the case of CCE-Chandigarh v. Sagar Steel - 2011 (265) E.L.T. 149 (Tri.-Del.), the question of imposition of penalty under Section 11AC was not at all there and the proposal itself was to levy penalty under Rule 25 and penalty equal to the duty was imposed. The Tribunal took a clear view that once there is intention to evade payment of duty is established, penalty under Rule 25 is imposable and in that case the penalty equal to duty imposed by the original adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in exercise of its discretion has imposed penalty of Rs. 1 lac, and the Tribunal in exercise of its discretion has enhanced the penalty which had been deleted by the Commissioner (Appeals) to 25% of the amount levied by the Adjudicating Authority, though of course by resorting to the provisions of Section 11AC of the Act. Thus, in either case it is exercise of discretion by the Adjudicating Authority as well as by the Tribunal as regards the quantum of penalty to be imposed. Merely because the Tribunal has fallen back upon the provisions of Section 11AC of the Act for the purpose of reducing the penalty to 25% of the amount imposed by the Adjudicating Authority, the same does not give rise to any question of law so as to warrant interference. 17. In this case Revenue had contended that penalty should not have been reduced under Section 11AC and an alternative submission was also made that penalty was imposed under Rule 25 of the Rules and as such provisions of Section 11AC of the Act should not have been invoked for the purpose of reducing the penalty. The Hon ble Gujarat High Court took the view that even though penalty was imposed under Rule 25, so long as the Tribunal had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount shall not be refunded to the manufacturer or adjusted against or utilized for payment of duty on any excisable goods under any other circumstances . 20. The Notification No. 16/96-C.E. (N.T.), dated 23-7-1996 abolished the money credit scheme and rescinded the Notification No. 45/89. Neither the old scheme was revived subsequently nor any Notification was issued granting permission to assessee to utilize the old accumulated credit. The Respondents approached the Hon ble Calcutta High Court by filing a Writ Petition No. 19214 of 1996 [2003 (157) E.L.T. 258 (Cal.)] praying for refund or allowing them to utilize the same for payment of duty on other excisable goods. The Learned Commissioner in his order has observed that from the judgment of the Hon ble High Court dated 12-5-2003, it is abundantly clear that Hon ble High Court held that The consideration is examined from excise duty up to a certain limit; refund of credit in terms of money is not possible and no other mode of adjustment is possible. The conclusion that no other mode of adjustment is possible shows that rejection of relief was not limited to refund alone. The above discussion would show very clearly that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee could not have entertained any bona fide belief about the correctness of utilization of the credit by them. Since the credit was not admissible and not available for payment of duty, clearances of goods made by using the credit were clearly clearances without payment of duty with intent to evade payment of duty. As contended in the Show Cause Notice and by tine Revenue in Appeal, provisions of Rule 4 and Rule 8 of Central Excise Rules have been contravened. Since the intention of evasion of duty and contravention of Rules has been established penalty is leviable under Rule 25 of Central Excise Rules, 1944. Since the issue is involved is simple and merely for the purpose of determining the quantum of penalty, it is not necessary in my opinion to remand the matter to the adjudicating authority. I consider that it would be appropriate if penalty under Rule 25 to the extent of Rs. 35,00,000/- (Rupees Thirty Five Lakhs only) is imposed on the Respondent under Rule 25 of Central Excise Rules, 2002. Accordingly, appeal filed by Revenue is allowed and penalty of Rs. 35,00,000/- (Rupees Thirty Five Lakhs only) is imposed on the appellant. Sd/- (B.S.V. Murthy) Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ...... Regarding the question of imposition of penalty, there is no suppression of facts before the Department of wilful mis-statement or fraud or evasion of duty. In the overall facts and circumstances of the case including the complexity of the issues involved, I come to the conclusion that this is not a case where the penal provisions can be upheld or that where the penalty can be imposed. Therefore, I refrain from imposing penalty in the instant case. In this regard the ld. advocate appearing for the appellant contended that there is no challenge to the above findings of ld. Commr. (Appeals) in the grounds of appeal filed by the Department. Para 5 and para 15 of order proposed by ld. Member (J) and ld. Member (T) respectively also supports the view of the ld. Advocate. It is pertinent to mention here that the provisions of Section 11AC are para-materia to the provisions of Rule 25(1)(d) so far as the contravention of any of the provisions of Rules with intent to evade payment of duty is concerned. In view of the above, I find that penalty is not imposable under Rule 25 ibid, considering the facts and circumstances of the instant case. Thus I agree with the Member (J) to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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