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TMI Blog2014 (10) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatic consequence of failure to pay duty, thereby rendering its order illegal, insofar as it relates to imposition of penalty. The Appellate Authority and the Tribunal failed to discern this error. - Decision in the case of Union of India v. Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] followed - Decided partly in favour of assessee. - CEA Nos. 22, 10 & 71-72 of 2013 (O&M) - - - Dated:- 9-10-2014 - Rajive Bhalla and Amit Rawal, JJ. Shri Jagmohan Bansal for Rajesh Garg, Advocates, for the Appellant. Shri Sukhdev Sharma, Advocate, for the Respondent. ORDER By way of this order, we shall dispose of four appeals namely CEA Nos. 22, 10, 71 and 72 of 2013. For the sake of convenience, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 4. Counsel for the respondent submits that as violation of provisions of the Act and the Rules, has been proved, mens rea is inherent in such a violation. The finding recorded by the Assessing Authority that mens rea is not required, has to be read in the above context. The failure of the appellant to deposit requisite duty is an attempt to evade duty by misstating relevant facts and therefore, attracts penalty. 5. We have heard learned counsel for the parties and perused the impugned orders. 6. The appellant manufactures rice bran oil. The manufacturing process produces gum, wax and fatty acids as waste products. The appellant claimed that as gum, wax and fatty acids are waste products, they are not exigible to Excise Duty. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AC(1)(a) of the Act, which reads as follows :- Section 11AC. Penalty for short-levy or non-levy of duty in certain cases. - (1) The amount of penalty for non-levy or short-levy or non-payment or short payment or erroneous refund shall be as follows :- (a) where any duty of Excise has not been levied or paid or short-levied or short-paid or erroneously refunded, by reason of fraud or collusion or any wilful misstatement or suppression of facts, or contravention 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 (10) of Section 11A shall also be liable to pay a penalty equal to the duty so determined; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in Paragraph 2 of the decision, as follows : 2. A Division Bench of this Court has referred the controversy involved in these appeals to a Larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. After referring to a number of decisions on interpretation and construction of statutory provisions, in Paragraphs 26 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 (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of penalty is fixed. It is pointed out that even if in some statutes mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated which he knows or has reason to believe . The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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