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TMI Blog2013 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to manufacture as per note 5 to Chapter 38 with effect from 1-3-1997 read with Section 2(f) of the Central Excise Act. As per Note 5 to Chapter 38, repacking of Servo Kool/Hydraulic Brake fluids in unit containers amounts to manufacturing with effect from 1-3-1997 and therefore the 1st respondent was liable to pay Central Excise duty on the repacked coolants and the brake fluids in unit containers are not eligible for SSI exemption. Within seven months from the date of Officers’ visit to the 1st respondent’s factory the assessee paid the duty. But it was only on 26-2-2002 the show cause notice was issued to the 1st respondent. It is the case of 1st respondent that such a demand of duty raised after 3½ years after the Officers’ visi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial questions of law : 1. For imposition of penalty under Section 11AC of Central Excise Act, 1944, once it is established that in a case ingredients of Section 11AC are present, the equivalent mandatory penalty has to be imposed irrespective of the fact whether payment of part/full duty has been made prior to issue of SCN. This being the position of law, whether the second respondent-Tribunal is right in not considering the issue that payment of duty prior to issuance of show cause notice would not absolve the first respondent from penalty when the evasion was unearthed only after the visit of the officers of the appellant-Department? 2. Whether on facts and in the circumstances of the case, the CESTAT was right in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling upon the 1st respondent as to why (a) an amount of ₹ 63,84,556/- being the duty payable on Servo Kool and Hydraulic Brake Fluids manufactured and cleared during the period from March 1997 to January 1998 should not be demanded under Section 11A(1) of Central Excise Act; (b) an amount of ₹ 5,00,696/- already paid by them should not be adjusted towards the said amount of duty; (c) penalty should not be imposed on them under Section 11AC of Central Excise Act, 1944 read with Rule 173Q of Central Excise Rules; and (d) interest on the amount so determined should not be demanded from them under Section 11AB of Central Excise Act, 1944. After due process of law, the Commissioner of Central Excise passed Order dated 30-4-2004 conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients of Section 11AC of Central Excise Act, 1944 are present, mandatory penalty has to be imposed irrespective of the fact whether payment of part/full duty has been made prior to issuance of show cause notice and while so, the Tribunal was not right in holding that payment of duty prior to issuance of show cause notice would absolve the 1st respondent from penalty when the evasion was found out only after the visit of the Officers of the appellant-Department. 6. The learned counsel for 1st respondent submitted that the duty liability to the extent of ₹ 5,00,696/- has been conceded by the assessee and that the demand of differential duty (Rs. 7,19,538 minus ₹ 5,00,796/-) is contested on the ground of limitation. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and the brake fluids in unit containers are not eligible for SSI exemption. 8. The 1st respondent/assessee has not disputed that duty has to be paid on the repacking goods viz., Servo Kool/Hydraulic Brake fluids in unit containers. Admitting the duty liability to the extent of ₹ 5,00,696/-, the 1st respondent/assessee paid the amount. The assessee only contested the demand of differential duty i.e., ₹ 7,19,538/- minus ₹ 5,00, 696/- on the ground of limitation. According to the 1st respondent, they had no liability to pay duty of excise on the repacked goods prior to 1-3-1997 and as SSI unit they were not required to register with the Department during such period. Further contention of 1st respondent is that only wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such factual finding, there is no substantial question of law per se involved. 11. In Kushal Fertilisers (P) Ltd. v. Commissioner of Customs C. Ex., Meerut [2009 (238) E.L.T. 21], the Supreme Court held as under : 19. Section 11A of the Central Excise Act, 1944 provides for penalty. It, therefore, requires strict consideration. Period of limitation provided for in the Act bars the jurisdiction of the Commissioner to initiate a proceeding for imposition of penalty on the expiry thereof. The proviso appended to Section 11A(1) of the Act makes an exception to the said Rule, the ingredients whereof are thus required to be established for invoking the extended period of limitation. If on the materials produced by the parties, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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