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TMI Blog2013 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissing Civil Appeal leads to merger of that part of the order alone, which was against the assessee. Once the assessee has availed the remedy of appeal and such appeal has been dismissed, the findings of the Tribunal, which are against the assessee, stands affirmed and stood merged with the order of the Hon’ble Supreme Court. It is more so, when the appeal was dismissed without notice to the Revenue and the Revenue had no opportunity to point that it intends to file an appeal against an order of the Tribunal. Therefore, the findings against the Revenue could be disputed before the competent Court of law. - in favor of revenue. Regarding penalty - held that:- The Tribunal has set aside the order of imposing penalty finding that it is a bona fide belief of the assessee in using the brand name of its sister concern. Therefore, such user is not with intent to evade payment of duty and, thus, levy of penalty has been rightly set aside. In respect of penalties imposable under Rule 26, again the penalty is payable if a person acquires possession of, or in any manner deals with any excisable goods ‘which he knows or has reason to believe’ are liable to confiscation under the Act. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Memorandum of Understanding was not arrived at on the date it purports to bear and that initial stand of the management of the assessee was that of right to use such trade name on account of relationship of the Directors of the assessee and M/s United Cocks Pvt. Ltd. Consequently, it was held that the assessee was using the brand name of another person and had manufactured and cleared goods affixed with brand name of another person, therefore, not eligible to avail benefit of SSI exemption for the period 15.02.2001 to 05.07.2003. Thus, it was ordered that the goods valued at Rs.5,89,273/- are liable to be confiscated. The Adjudicating Authority also confirmed the demand of Rs.40,00,163/- and imposed penalties on Shri Ashok Sharma and Shri Dheeraj Sharma, Directors of the assessee. In the separate appeals by the assessee and its Directors, the demand and the penalties imposed were confirmed. However, in further appeals, the learned Tribunal relied upon CCE, Mumbai Vs. Bigen Industries Ltd. 2006 (197) ELT 305 (SC) to observe that the use of the brand name on the basis of consent of the proprietor of the brand name or assignment is permissible. The Tribunal held that plain reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon ble Supreme Court, this Court is precluded from examining the legality of the order passed by the Tribunal against the Revenue. In view of the arguments raised, we find that the following substantial questions of law arise for consideration: (i) Whether the demand of duty claiming exemption as per Notification No.8/2001 relates to the determination of rate of duty of excise or to the value of goods , which may lead to exclusion of jurisdiction of this Court in an appeal under Section 35G of the Act? (ii) Whether dismissal of an appeal by the Hon ble Supreme Court at the instance of assessee precludes the Revenue from availing the remedy of appeal under Section 35G of the Act? Before we examine the above questions, it would be expedient to extract Section 35G of the Act. The relevant provision of Section 35G reads as under: 35G. Appeal to High Court (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be maintainable before this court. In respect of second question of law, we find that the assessee has filed Civil Appeal bearing Diary No.35099 of 2010. Such appeal was dismissed by the Hon ble Supreme Court on 13.12.2010 by passing the following order: Delay condoned. The Civil Appeal is dismissed. The Hon ble Supreme Court in a judgment reported as Kunhayammed others Vs. State of Kerala another, (2000) 6 SCC 359 examined the doctrine of merger in relation to the person, who has filed an appeal and/or special leave to appeal. It was held that the review before the court after the appeal was dismissed would not be maintainable. It was held to the following effect: 34. The doctrine of merger and the right of review are concepts which are closely interlinked. If the judgment of the High Court has come up to this Court by way of a special leave, and special leave is granted and the appeal is disposed of with or without reasons, by affirmance or otherwise, the judgment of the High Court merges with that of this Court. In that event, it is not permissible to move the High Court by review because the judgment of the High Court has merged with the judgment of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason that the subject matter of the appeal filed by the assessee was limited to disallowance of two out of eight deductions claimed by the assessee. The Tribunal had no occasion to examine the admissibility of the deductions under the remaining six heads, as the assessee s appeal did not question the grant of such deductions. The Court held to the following effect: 18. Applying the above test to the case at hand the doctrine would have no application for the plain and simple reason that the subject matter of the appeal filed by the assessee against the adjudicating authority s order in original was limited to disallowance of two out of eight deductions claimed by the assessee. The Tribunal was in that appeal concerned only with the question whether the adjudicating authority was justified in disallowing deductions under the said two heads. It had no occasion to examine the admissibility of the deductions under the remaining six heads obviously because the assessee s appeal did not question the grant of such deductions. Admissibility of the said deductions could have been raised only by the Revenue who had lost its case qua those deductions before the adjudicating authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal in favour of the revenue. The appellant Revenue has claimed the following substantial questions of law arising from the order of the Tribunal: (i) Whether in the facts and circumstances of the case, the Hon ble Tribunal erred in setting aside the confiscation and penalty under Rule 25 of the Central Excise Rules, especially so when duty liability and clandestine removal has been confirmed? (ii) Whether penalty on Shri Ashok Sharma and Shri Dheeraj Sharma under Rule 26 of the Central Excise Rules, 2002 have been set aside wrongly by the Hon ble Tribunal, when Shri Ashok Sharma and Shri Dheeraj Sharma s role are clearly brought out in para Nos.39 41 of Order-in- Original. These paras show that those persons have knowingly concerned themselves in removing, keeping, concealing etc. of excisable goods which they have reason to believe that the same are liable for confiscation? The Revenue has disputed that part of the order, whereby the penalties imposed under Rules 25 26 of the Central Excise Rules, 2002 (for short the Rules ) were set aside. The relevant Rules read as under: 25. Confiscation and penalty (1) Subject to the provisions of section 11AC of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been cleared without payment of duty on the strength of exemption under the Notification No.8/2001 though such benefit was not admissible to the assessee. The penalties under Rule 26 are imposable, when the Directors of the assessee have concealed the storage or dealing with the goods from the premises of the assessee so as to impose penalty under Rule 26. In Associated Cement Co. Ltd. Vs. CTO (1981) 4 SCC 578, the Supreme Court noticed that tax, interest and penalty are three different concepts. Penalty ordinarily becomes payable when it is found that an assessee has willfully violated any of the provisions off the taxing statute. In Hindustan Steel Ltd. v. State of Orissa, (1969) 2 SCC 627, the Supreme Court held that unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation, the penalty is not imposable. It observed as: 8. Under the Act penalty may be imposed for failure to register as a dealer Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court held that it is not necessary that mens rea must be proved before penalty can be imposed under the provisions of Section 15 of the Securities and Exchange Board of India Act, 1992. The Court held that once the contravention is established, then the penalty has to follow and only the quantum of penalty is discretionary. The Supreme Court observed as under: 29. Under a close scrutiny of Sections 15-D(b) and 15-E of the Act, there is nothing which requires that mens rea must be proved before penalty can be imposed under these provisions. Hence, we are of the view that once the contravention is established, then the penalty has to follow and only the quantum of penalty is discretionary. Discretion has been exercised by the adjudicating officer as is evident from imposition of lesser penalty than what could have been imposed under the provisions. The intention of the parties is wholly irrelevant since there has been a clear violation of the statutory Regulations and provisions repetitively, covering a period of 6 quarters. Hence, we hold that the respondents have wilfully violated statutory provisions with impunity and hence the imposition of penalty was fully justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires mens rea as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible. 23. The Court in this connection may remind itself of the fundamental principle: (AC p. 496 E) that an accused person cannot be convicted without proof of mens rea, unless, from a consideration of the terms of the statute and other relevant circumstances, it clearly appears that that must have been the intention of Parliament. (See the decision of the House of Lords in Vane v. Yiannopoullos 1965 AC 486 and the opinion of Lord Reid at AC p. 496 E : All ER p. 823.) 24. In Vane v. Yiannopoullos 1965 AC 486, the word knowingly was used in the statute as a condition of creating liability. 25. The aforesaid dictum of Lord Reid has been followed by this Court also. A reference in this connection may be made to Union of India v. Rajasthan Spg. Wvg. Mills (2009) 13 SCC 448. This Court considering Section 11-AC of the Act held in ELT para 19 at p. 12 of the Report as follows: (SCC p. 459, para 29) 29. From th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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