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TMI Blog2015 (2) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], in which supreme court held that the decision in Dharamendra Textile must, therefore be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. In view of the categorical statement of law and taking note of the specific provision of Section 11AC of the Central Excise Act, we are of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief facts of the case are as follows: The second respondent/assessee are the manufacturers of cotton yarn and man made yarn falling under Chapter 52 and 55 respectively of the First Schedule to the Central Excise Tariff Act, 1985. They removed modvat availed inputs without payment of duty, as stipulated under Rule 57F(3)(a)/Rule 57AB(I)(b) of the erstwhile Central Excise Rules 1944 and Rule 3(4) of Cenvat Credit Rules, 2001 during the period 06.04.98 to 28.12.01. Since they failed to raise invoices for the removal of such credit availed inputs as stipulated under the above-said Rules, show cause notice dated 31.3.2003 was issued to the assessee proposing to demand duty under Section 11A(1), interest under Section 11AB and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty had become final. 6. The Tribunal, after hearing both sides dismissed the appeal holding as follows: 2. After examining the records and hearing both sides, I find that the lower appellate authority has sustained the findings recorded by the original authority for imposing penalty on the respondents under Section 11AC. However, in the facts and circumstances of the case, the penalty (equivalent to duty) imposed by the original authority was held to be too high and the same was reduced as above. The appellant is aggrieved by this reduction of penalty. Learned Commissioner (Appeals) has examined the circumstances of the case and exercised his discretion in the matter of imposing penalty. I do not think that it is proper for this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty under Section 11AC is imposable. 10. While considering the pari materia provision, namely, Section 11AC of the Central Excise Act, the Supreme Court in the decision reported in 2008 (231) E.L.T. 3 (S.C.) (Union of India V. Dharamendra Textile Processors), 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 sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are remitted to the respective Tribunals for fresh consideration, in accordance with law, and in the light of this judgment.... 12. Following the above-said decisions, this Court by order dated 12.12.2014 in C.M.A.No.1099 of 2008 allowed the appeal filed by the Revenue answering the questions of law with regard to the issue on penalty levied under Section 11AC of the Central Excise Act in favour of the Revenue. 13. In view of the categorical statement of law and taking note of the specific provision of Section 11AC of the Central Excise Act, we are of the view that the Tribunal is not justified in confirming the order of the Commissioner (Appeals), who reduced the penalty imposed under Section 11AC of the Central Excise Act. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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