9911796707
TMI Blog2007 (6) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of duty. Since the matter involved an important question as to whether any different view can be taken in the context of penalty under Section 11AC in cases where the extended period of limitation is invoked under the proviso to Section 11A(1), it has been placed before this Larger Bench, since the Division Bench was of the opinion that it was required to be heard by a Larger Bench. 2. The Division Bench had earlier by its order dated 11-8-2004 set aside the order of the Commissioner (Appeals) by which it was held that the duty demand was time-barred and the duty of Rs. 73,042/- against the respondents was confirmed. However, keeping in view the facts and circumstances of the case, the Tribunal reduced the penalty of the like amount of Rs. 73,042/-, which was imposed by the adjudicating authority under Section 11AC, to Rs. 10,000/-. Admittedly, the respondents did not prefer any appeal against the order of the Tribunal by which the duty was confirmed and the reduced penalty of Rs. 10,000/- was imposed on them. The Revenue, however, preferred an appeal before the Hon'ble the High Court against the order of reduced penalty on the ground that only penalty equal to the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was required to take all the consequences of payment of duty. It was also held that, as the assessee had deliberately failed to include the value of item bush in the assessable value of pulsator in order to short pay duty, the extended period of five years was invocable under Section 11A of the Act. The duty demand of Rs. 73,042/- was, therefore, confirmed against the company and penalty of the like amount was imposed on it, under Section 11AC of the said Act, besides the penalty of Rs. 10,000/- imposed under Rules 173Q and 209 of the erstwhile Rules read with Section 38A of the said Act. 4. The Appellate Commissioner noted that there were two issues to be decided in the appeal preferred by the present respondent, namely, whether the cost of bush received free of cost to be fitted in the pulsator manufactured by the assessee was includible in its assessable value while clearing it on payment of duty, to the user of pulsator and, whether the demand raised was hit by limitation period under Section 11A of the Act. The Appellate Commissioner rejecting the plea of the assessee on the merits of the demand held, in Paragraph 6 of the impugned order that the value of bush was incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, there was an obvious suppression of this material fact by them from the department and this suppression on their part could not be said to be innocent, rather, it was deliberate with intent to evade payment of appropriate duty on their product pulsator. It was, therefore, held that, the extended period of limitation for raising the duty demand had been correctly invoked against the respondents. The order of the Commissioner (Appeals) was, therefore, set aside and the duty demand confirmed and penalty reduced from the like amount of Rs. 73,042/- to Rs. 10,000/- 6. Admittedly, the respondent had accepted the order of the Tribunal by not challenging it. However, the Revenue had challenged the said order dated 11-8-2004 to the extent that it imposed a reduced penalty of Rs. 10,000/- as against the penalty of Rs. 73,042/- originally imposed by the adjudicating authority being the amount equal to the duty demand confirmed. Obviously, therefore, the order of the remand that has been made by Hon'ble the High Court for reconsidering the question of penalty has to be viewed in the background of the fact that the rest of the order, which was against the respondents was never ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate duty on their final product, and held that the extended period of limitation was rightly invoked That part of the order of the Tribunal had not been challenged by the assessee and has, therefore, become, final. However, since the Tribunal had reduced the penalty to Rs. 10,000/- under Section 11AC as against the duty demand of Rs. 73,042/-, which was confirmed, only that part of the order was challenged in the appeal of the Revenue on the ground that the penalty equal to the duty determined, i.e., Rs. 73,042/- was required to be imposed and that the provisions of Section 11AC did not warrant any such reduction. Since Hon'ble the High Court has directed that the Tribunal should give a fresh decision on the question of levy of penalty and that if it is held that levy of penalty is warranted having regard to the requirements of the statute, the Tribunal will be bound to levy penalty equal to the amount of duty, this Tribunal is required to consider afresh even the question whether the penalty was warranted. 9. The learned Authorized Representative for the department has in the above background contended that, the scope of the remand proceedings has been limited by the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of review available to the Tribunal. 10. The learned Authorized Representative for the respondent submitted that, since the Hon'ble the High Court had set aside the order of the Tribunal and remanded the case on the question of penalty, the finding of the Tribunal in its earlier dated 11-8-2004 that the extended period of limitation for raising the duty demand, has been rightly invoked against the respondents, has been completely wiped off the record and does not remain alive, notwithstanding the fact that the respondent-manufacturer had not challenged that finding by way of any appeal/cross-objection before the Hon'ble High Court. It was submitted that penalty could be imposed only if the proposed demand was sustainable. Reliance was placed on the decision of the Hon'ble the Supreme Court in International Auto Ltd. v. CCE reported in 2005 (183) E.L.T. 239 (S.C.) in support of this contention. It was submitted that the order of the Commissioner (Appeals) relating to merits was not appealed against before the Tribunal, as the respondent was not aggrieved by that order because the order-in-original had been set aside on the issue of limitation. The learned authorized represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e open for this Tribunal to consider the question of liability to pay the duty, which has been finally decided against the respondent, and the duty liability stood determined at Rs. 73,042/- as per the order of adjudication, which stood confirmed by the earlier order of the Tribunal. 13. Question whether penalty was warranted would depend upon the finding whether the evasion of duty was due to fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, as contemplated by Section 11AC of the Act. The provisions of Section 11AC, as they stood prior to the amendment made on 12-5-2005, read as under :- "Section 11AC. Penalty for short-levy or non-levy of duty in certain cases.- Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with in tent to evade payment of duty, the person who is liable to pay duty as determined u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase in the duty takes effect. Explanation. - For the removal of doubts, it is hereby declared that- (1) The provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of Section 11A to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President. (2) Any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person] 13.2 Since the period of demand was from 1998-1999 to 2000-2001, Section 11AC, as it stood prior to the amendment from 12-5-2000, will apply for the period from 28-9-1996 to 11-5-2000 while for the period from 12-5-2000 covered under the demand notice, the amended provisions of Section 11AC will apply. 14. Both under the pre-amended and amended provisions of Section 11AC, penalty can be imposed only where the duty evasion was caused by reason of fraud, collusion, or wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or the Rules, with intent to evade payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been levied or has been short-levied or short-paid or erroneously refunded by reason or fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the Rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect as if, for the words, one year the words 'five years' were substituted." 14.1 It is obvious that when the ingredients laid down in the proviso of Section 11A (1) for invoking the extended period of limitation and in Section 11AC for imposition of penalty are identical in a case where these ingredients are satisfied for invoking the extended period of limitation, that very finding will enure for the purpose of imposing penalty under Section 11AC In other words, there can be no warrant for holding that though there is fraud or suppression or violation of the provisions of the Act or the Rules with intent to evade duty so as to justify invoking the extended period of limitation notwithstanding such finding, penalty may not be imposed under Section 11AC. On the same facts and in the same case, there would be no warrant for igno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased by the appellate forum, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and 25% of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect. The above provisions of Section 11A leave no scope for contending that Section 11AC provides liability to pay a penalty equal to the duty determined only as a maximum penalty that could be levied, giving a discretion to impose any lesser amount. We, therefore, hold that since levy of penalty is warranted on the respondents, this Tribunal is bound to levy penalty equal to the amount of duty, as directed by the Hon'ble the High Court of Punjab and Haryana in its order dated 21-7-2006. 16. We, accordingly, hold that the impugned order of Commissioner (Appeals) is liable to be set aside, and the order-in-original is required to be re stored fully even on the issue of quantum of penalty imposed against the respondents. The appeal of the Revenue is, accordingly, allowed, and the order of the adjudicating authority stands fully restored. (Pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
