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TMI Blog2013 (3) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... lment of the conditions as enumerated in Section 11AC, the penalty equal to the amount of duty determined is mandatory and there is no discretion in the Tribunal to reduce the said penalty. However, as laid down by the apex Court in Union of India Vs. Rajasthan Spinning and Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA), the penalty under section 11AC can be imposed only when conditions mentioned in Section 11AC exist. The authorities have no discretion in fixing the quantum of penalty and penalty equal to the duty must be imposed once section 11Ac is made applicable. The question of law is answered in favour of the revenue as the appellate Tribunal had no discretion to reduce the amount of penalty as specified under section 11 AC. - Central Excise Appeal No. - 142 of 2004 - - - Dated:- 6-7-2012 - Ashok Bhushan And Prakash Krishna,JJ. Petitioner Counsel :- K.C. Sinha, S.S.C.,A K Nigam,A K Rai JUDGMENT This appeal under section 35G (2) of the Central Excise Act, 1944 has been filed against the judgment and order dated 20.7.2004, passed by Custom Excise and Service Tax Appellate Tribunal in Appeal No. E/642/2004-B. The appeal has been admitted by this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenging the order of the Tribunal contended that the Tribunal committed an error in reducing the penalty. He submitted that under section 11AC of the Central Excise Act, 1944 (hereinafter referred to Act, 1944) the imposition of penalty equal to the duties determined is mandatory. He submits that there is no discretion with the Tribunal to reduce the penalty and the order of the Tribunal reducing the penalty is without jurisdiction. It is further submitted that the Tribunal while reducing the penalty has not given any reason for such reduction. Sri Piyush Agrawal, learned Counsel for the respondent refuting the submissions of learned counsel for the appellant contended that the Tribunal for good and sufficient reason has reduced the penalty and the power to reduce the penalty has to be read in the Tribunal in doing complete justice between the parties. He submits that imposition of penalty is not mandatory and the imposition of penalty is permissible only on fulfilling the conditions as enumerated under section 11AC. He submits that pre-condition for imposition of penalty being not satisfied infact no penalty was liable to be levied on the respondent. Reliance has been placed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand modified accordingly and after taking into account the amount of duty of excise so modified, the person who is liable to pay duty as determined under subsection (10) of section 11A shall also be liable to pay such amount of penalty or interest so modified. Explanation For the removal of doubts, it is hereby declared that in a case where a notice has been served under sub-section (4) of section 11A and subsequent to issue of such notice, the Central Excise Officer is of the opinion that the transactions in respect of which notice was issued have been recorded in specified records and the case falls under sub-section (5), penalty equal to fifty per cent of the duty shall be leviable. (2) Where the amount as modified by the appellate authority is more than the amount determined under sub-section (10) of section 11A by the Central Excise Officer, the time within which the interest or penalty is payable under this Act shall be counted from the date of the order of the appellate authority in respect of such increased amount." to be tallied. Section 11 AC has been inserted in the Act by Act No. 33 of 1996 w.e.f. 28.9.1996. Further amendment in Section 11 AC was brought by Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made within 30 days, shall not be in consonance with the scheme of the Act. Thus, reduction of penalty when has been statutory contemplated in one situation any other circumstance for reduction of penalty cannot be read into the provision. Thus, when condition for imposing penalty under section 11 AC are fulfilled, no discretion can be read into the adjudicating authority or the appellate authority to impose any other penalty not contemplated under section 11AC. The issue had come for consideration before the apex Court in several cases. In 1999 (112)ELT 772 Zunjarrao Bhikaji Nagarkar Vs. Union of India, the provisions of Section 11AC and Rule 173 came for consideration in context of initiation of disciplinary inquiry against a Collector/Commissioner of Central Excise in not levying penalty even though duty was determined under section 11A(2). The apex Court laid down in the said case that imposition of penalty was not discretionary. In context of Rule 173Q, it was held that it is only the amount of penalty which is discretionary in Rule 173Q. The penalty could have been levied not exceeding three times of the duty, the three times, the value of the executable goods. However, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument of the appellant that levy of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary: goods are liable to confiscation and concerned is liable to penalty. We may ontrast the provisions of Rule 173Q and Section 11AC with Section 271 of the Income-tax act, 1961. This Section, prior to amendment in 1988, stood as under : "Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Income Tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceedings under this Act is satisfied that any person (a) has failed to furnish the return of total income which he was required to furnish under sub-section (1) of Section 139 or by notice given under subsection (2) of section 139 or section 148 or has failed to furnish it within the time allowed and in the manner required by sub- section (1) of section 139 or by such notice as the case may be, or (b) has without reasonable cause failed to comply with a notice under sub- section (1) of section 142 or sub- section (2) of section 143 or fails to comply with a direction issued under sub-section (2A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the officer hence, the disciplinary proceedings were quashed. But the argument that imposition of penalty was discretionary was rejected. The judgment of the apex Court in State of Madhya Pradesh Vs. Bharat Heavy Electrical (supra) has been relied by learned counsel for the appellant in which case, the apex Court interpreted the provisions of Section 7(5) of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976. The High Court struck down the said provisions on the ground that it was confiscatory in nature and ultra-vires. Section 7(5) contained a provision that registered dealers shall be liable to pay the penalty equal to 10 times the amount of entry tax payable. The arguments before the apex Court on behalf of the State was that provisions of Section 7(5) was to be read down and the submission on behalf of the State was advanced that ten times is the maximum limit and not a fixed amount of penalty and there was no discretion in for imposition of lesser penalty. The apex Court on the aforesaid fact set aside the judgment of the High Court and held Section 7(5) as intra-vires. Following was laid down in paragraphs 11 to 13: " 11. In our opinion Mr. Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this manner the decision of the High Court that Section 7[5] is ultra vires cannot be sustained." The above judgment does not help the respondent in the present case for two reasons; firstly a provision which is under consideration in the present appeal under section 11AC was not up for consideration in the said case and secondly, the learned counsel for the State itself has conceded that amount of penalty i.e. 10 times was not a fixed amount and there was a discretion in the authority for imposing the penalty and the presumption was rebuttable. The said judgment was thus on concession as made by learned counsel for the State before the apex Court hence, the said judgment is of no help to the respondent in the present case. The next judgment to be considered is the judgment of the apex Court in 2005 (182) E.L.T. 289 Commissioner of Central Excise, Chandigarh-I Vs. Dabur (India) Ltd. In the said case also the Tribunal had reduced the quantum of penalty. On an appeal filed by the Commissioner Central Excise, the apex Court noticed the submission but the question as to whether the Tribunal had power to reduce the penalty was left open and not decided. The judgment of the apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AC can be construed in a manner by reading into it the discretion. That would be the proper way to give effect to the statutory intention 13. It is a well-settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. 14. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. See Institute of Chartered Accountants of India v. Price Waterhouse 1977 6 SCC 312. The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner (1846) 6 MOO PC1, the courts can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 27 of the decision, the court observed and held as follows: 26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. 27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of nonpayment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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