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TMI Blog2014 (9) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... that wherever duty amount is increased at an appellate stage, for availing the benefit of 25% reduced penalty, the assessee needs to pay differential amount of duty within 30 days of crystalisation of such amount. It would not be too much to expect the Revenue authorities to clearly spell out the fulfilment of such requirements in the order itself. The Circular issued by the CBDT shall need to be regarded at this stage, which also noted that the provision has been made for the speedy recovery of the amount in the interest and benefit of both, the Department and the assessee. Thus, if the duty and interest are to be paid along with reduced rate of penalty within the stipulated period. This Court in a number of decisions has also taken a stand that if both the authorities have failed to avail the option of reduced penalty i.e. the Order-in-Original and Appellate Commissioner, the Tribunal can surely avail such benefit at the appellate stage. In the Order-in-Original itself, the adjudicating authority had made available such an option to the assessee by spelling out in no unclear terms that the duty and interest if are paid along with reduced rate of penalty, the penalty shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payable thereon under Section 11AB and penalty at 25% of the duty determined under Section 11A(2) has been paid within thirty days from the date of communication of the order of the Central Excise officer determining duty payable under Section 11A(2) of the 1944 Act? (b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law by passing impugned order by relying upon the decision of this Hon ble Court in the case of Aakash Fashion Prints Pvt. Ltd. even though the said decision is challenged by the Department before the Hon ble Supreme Court and thus it has not attained finality on the issue of jurisdiction of the Tribunal to extend benefit of reduced penalty in exercise of powers under Section 11AC of the Central Excise Act, 1944? 2. Brief facts are as under : 2.1 The assessee-respondent M/s. Rajshree Dyeing and Printing Mills (P) Ltd. is engaged in manufacturing of Dyed MMF falling under Chapter 54 of the Schedule to the Central Excise Tariff Act, 1985. 2.2 The Central Excise Officers headed by Superintendent (Preventive) visited the factory premises of the respondent on October 15, 2001 and found excess stock of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or discharge of penalty at the rate of 25% of the amount of duty confirmed, is required to be extended following the decision of this Court in Commissioner of Central Excise, Ahmedabad-I v. Akash Fashion Prints Ltd., reported in 2009 (239) E.L.T. 439 (Guj.). It is further mentioned that the assessee-respondent had already discharged such liability consequent to the oral order of Tribunal on January 18, 2012 during the course of hearing. Therefore, it directed the lower authorities to consider such amount as discharge of liability towards penalty and interest. Even the reduced amount of penalty imposed on the Director has also been deposited by the assessee-respondent. 2.7 The order impugned has been challenged in the present appeal raising the aforementioned substantial questions of law. 3. At the time of issuance of notice, we had noted that the Department seeks to distinguish the present case from the line of decision rendered in the case of Akash Fashion Prints Ltd. (supra). The only question that remains before this Court is as to whether at an appellate stage such an opportunity can be afforded, when the adjudicating officer in the Order-in-Original confirmed the duty de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the outset prayed for time so as to have the appeal listed along with other matters wherein issue regarding penalty under Section 11AC of the Central Excise Act, 1944 (the Act), is stated to be pending by way of various Tax Appeals. When the attention of the counsel was invited to the order made by the Adjudicating Authority and the fact that the Tribunal had reduced the penalty to 25% of the penalty imposed, the learned counsel once again reiterated request for adjournment. In light of the peculiar facts of the case, the request has been turned down by the Court. 5. Section 11AC of the Act provides for levy of penalty in cases of short-levy or non-levy of duty in certain cases. The first proviso thereunder provides for exception to the main provision by stipulating that where the duty and the interest are paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid under Section 11AC of the Act shall be 25% of the duty so determined; and under second proviso, it is provided that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving thus : 2. Heard learned counsel Mr. R.J. Oza and perused the order of the Tribunal, which as relied on the decision in case of Swati Chemical Industries Ltd. Ors., reported in 2009 (248) E.L.T. 421. This matter, when was challenged by way of this Appeal before this Court, the order of Tribunal was confirmed in case of Commissioner of Customs Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited, reported in 2009 (239) E.L.T. 439 (Guj.). In various judgments of this Court, this view has been upheld. As the Department could not point out any reason for taking contrary view then already taken in earlier Tax Appeals, and with no question of law remain to be determined by this Court, the present Tax Appeal fails and is dismissed. 9. This Court in the case of Exotic Associates v. Commissioner of Central Excise, reported in 2010 (252) E.L.T. 49 (Guj.), was confronted with the similar issue. It referred to the decision of various High Courts, particularly the decision of K.P. Pouches (P) Limited v. Union of India, 2008 (228) E.L.T. 31 (Delhi) and the decision of Punjab and Haryana High Court in the case of Commissioner of Central Excise, Rohtak v. J.R. Fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was, however, not given any option as to whether he wants to pay the duty within 30 days from the date of the adjudication order. The Court, therefore, took the view that the conclusion reached by the Tribunal that the assessee was liable to pay penalty to the extent 25% of the amount of duty of excise demanded by the officer concerned. While arriving at this conclusion, the Court has also considered the decision of the Apex Court in the case of Dharmendra Textile (supra) and observed that the provisos first and second which were added in the year 2000 were not the subject matter of consideration before their Lordships in Dharmendra Textile Processor s case (supra). The Court, therefore, did not find any substance in the contention raised on behalf of the Revenue, especially, in the face of express provision made by the four provisos in the year 2000. 15. Considering the above judgment of the Delhi High Court as well as Punjab Haryana High Court and further considering the impugned order of the Tribunal, we are of the view that the matter requires to be considered afresh in light of the above decisions of the Delhi High Court as well as Punjab Haryana High Court. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were dealt with by this Court in Tax Appeal No. 572 of 2007 with Tax Appeal No. 869 of 2007, decided on 18-11-2009. It is also important to note that the adjudicating authority has not calculated the interest neither in the Order-in-Original nor even thereafter. It is, therefore, too much to expect from the respondent assessee to pay the interest along with the duty amount in absence of such calculation of interest. As far as statutory obligation of the adjudicating authority is concerned, the Central Excise Department itself has issued Circular on 22-5-2008 wherein it is clarified that in all cases wherein penalty under Section 11AC of the Act is imposed the provisions contained in the first and second proviso of Section 11AC should be mandatorily mentioned in the Order-in-Original itself by the adjudicating authority. It is, therefore, not open for the Revenue to agitate this issue before the Court in contradiction of the Circular issued by the Central Excise Department. This Court in Messers Exotic Associates (supra) has directed the adjudicating authority to pass a fresh order giving option to the assessee to pay the duty amount within 30 days by making it explicitly clear i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the amount of penalty would be reduced to 25% of the amount of duty. However, when such an option is not given, the matters have been remanded to the concerned authorities and the period of 30 days is directed to be considered from the date of availing such option. 12. In the said Tax Appeal, this Court remanded the matter to the Tribunal and it also noted that none of the authorities below had availed any option to the assessee to pay the duty determined with interest and penalty of 25% of the duty within 30 days. The Tribunal also was of the opinion that the duty determined under Section 11AC of the Act was subsequent to the year 2000 and, therefore, the case of the assessee was falling under the explanation to Section 11AC of the Act and, therefore, the Court deemed it fit not to review the order of the Tribunal which had availed option to the respondent-assessee. 13. The Bombay High Court in the case of Commissioner of Central Excise, Raigad v. Castrol India Ltd., reported in 2012 (286) E.L.T. 194 (Bom.), was examining the question whether the Tribunal was justified in directing the assessee to pay 25% of the penalty levied under Section 11AC within 30 days from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conditions set out in the first and the second proviso to Section 11AC within the time stipulated therein, then, the incentive is lost and the assessee is required to pay penalty at 100%. Therefore, in the absence of any obligation cast upon the Central Excise Officer under Section 11AC to determine penalty at 25%, the argument that if the Central Excise Officer fails to determine 25% penalty, the appellate authority can determine 25% penalty and permit the assessee to pay penalty within thirty days from the date of communication of the order passed by the appellate authority cannot be accepted. xxx xxx xxx 26. By comparing Section 11AB with Sections 11A(2B) and (2C) and also by referring to Section 11AC as substituted with effect from 8th April, 2011, it was contended by the counsel for the assessee that it was never the intention of the legislature to levy 100% penalty under Section 11AC. We see no merit in the above contention because, firstly sub-sections (2B) and (2C) to Section 11A are applicable to cases not involving fraud, collusion, suppression of facts, etc., whereas Section 11AC applies to cases where there is intention to evade payment of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second proviso to Section 11AC. For all the aforesaid reasons, we find it difficult to endorse the contrary views expressed by the Delhi High Court, P H High Court and the Gujarat High Court in the cases referred to by the counsel for the assessee. 14. The Delhi High Court in the case of Sri Sai Enterprises v. Commissioner of Central Excise, reported in 2013 (288) E.L.T. 40, was examining the question whether the assessee, who had not taken the advantage of first proviso to Section 11AC of the Act and had not paid duty or interest, can be availed the benefit of reduced percentage of penalty. In a matter before the Delhi High Court, the Order-in-Original did not give option to pay duty and interest along with 25% penalty to the assessee. The assessee on its own, after receipt of the order did not approach the Assessing Officer making a request for giving such option and preferred an appeal against such order without deposit of duty and interest. The Court, therefore, held that the conduct of the assessee was indicative that he never wanted to avail the benefit of first proviso to Section 11AC of the Act. The assessees plea that they were compelled to pay duty due to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined under Section 11A(2) and interest payable thereon has been paid within 30 days. ii. The said period of 30 days is calculated from the date of communication of the order passed by a Central Excise Officer determining the duty. iii. The reduced 25% penalty is also paid within 30 days of the date of communication of the order passed by the Central Excise Officer. 3. From the above it is clear that in order to avail the benefit of 25% penalty, the duty, interest and penalty are required to be paid within 30 days of communication of the order passed by the adjudicating authority. Further, the reading of proviso (4) would also support this interpretation because the said proviso stipulate that wherever duty amount is increased at any appellate stage, in that case in order to avail the benefit of 25% penalty, the assessee is required to pay differential amount within 30 days of the passing of the order by the appellate authority. A combined reading of all the 4 provisos would, therefore, make it clear that the benefit of 25% penalty is applicable only when the assessee has paid duty, interest and the reduced penalty within 30 days of communication of the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso (4) to Section 11AC of the Act that wherever duty amount is increased at an appellate stage, for availing the benefit of 25% reduced penalty, the assessee needs to pay differential amount of duty within 30 days of crystalisation of such amount. 17. At this stage, a note is to be made of the instructions issued by the Department vide File No. 208/07/2008-CX-6, dated May 22, 2008. This talks of making the assessee aware of the proviso to Section 11AC of the Act. This being an incentive given to the assessee and being beneficial for both, Department and the assessee, the assessee if pays duty amount along with interest, the penalty is reduced to 25% of the duty and, therefore, such instruction specifies that this proviso having been inserted for speedy recovery of the disputed amount, the awareness needs to be created. A note also need to be taken of the circular dated September 15, 2009 being Circular No. 898/18/2009-CX, which interprets the provision relating to reduction of penalty to 25% contained in provisos (1) to (4) of Section 11AC of the Act, which requires that on determination of duty under Section 11A(2) of the Act, both the duty and interest need to be paid wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT shall need to be regarded at this stage, which also noted that the provision has been made for the speedy recovery of the amount in the interest and benefit of both, the Department and the assessee. Thus, if the duty and interest are to be paid along with reduced rate of penalty within the stipulated period. This Court in a number of decisions has also taken a stand that if both the authorities have failed to avail the option of reduced penalty i.e. the Order-in-Original and Appellate Commissioner, the Tribunal can surely avail such benefit at the appellate stage. In the instant case, however, what can be noted is that in the Order-in-Original itself, the adjudicating authority had made available such an option to the assessee by spelling out in no unclear terms that the duty and interest if are paid along with reduced rate of penalty, the penalty shall be worked out at the reduced rate of 25%. The petitioner, however, has chosen not to pay either the duty or interest or the reduced rate of penalty and instead challenged such order before the Commissioner, who of course set aside the order of imposition of penalty on the respondent-Unit and a personal penalty imposed upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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