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TMI Blog2007 (7) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal were set-aside on the ground that the respondent No. 1 (original noticee No. 1 - Partnership Firm) had already paid up the full amount of duty and penalty, and the respondent No. 2 (original noticee No. 2 - partner of the said Firm) had also deposited the full amount of penalty. Admittedly, the entire duty amount of Rs. 78,841/- was paid up by the respondent no. 1 by paying Rs. 53,851/- on 12-1-2002 i.e. the date on which the Revenue Officers visited the factory and when shortages were noticed, and the remaining amount of Rs. 25,000/- on 14-1-2002. Twenty five percent of the duty amount was paid by way of penalty on 19-3-2002 presumably for taking the benefit of the provisions of first proviso to Section 11AC of the Act. The respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reduce penalty of 25% of the duty determined was not established, because payment of the interest amount was not shown to have been made as required by the first proviso to Section 11AC of the Act. 3. The learned counsel appearing for the respondents in these two appeals, argued that, there was no allegation of any intention to evade duty made in the show cause notice and in which penalty was proposed to be imposed under Rule 25 of the said Rules, which prescribes a minimum penalty of only Rs. 10,000/-. It was submitted that, the entire duty amount and penalty calculated at 25% of the duty determined was, admittedly, paid up before the issuance of the show cause notice dated 30-12-2002 He submitted that, there was no demand of interest m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, on physical verification of the stocks lying in the factory premises, a shortage of 40 .396 MT of raw material and 0.810 MT of scrap was detected. These shortages were admitted by the partner of the firm, who also signed the verification charts prepared on the spot, on 12-1- 2002. The said partner (Shri Kamal Singla), in terms, admitted that, the said raw material was sold by them in the local market without entering the same in the statutory records and without issuing invoices and also without paying the Central Excise Duty of Rs. 77,721/-, which was payable thereon. He agreed to deposit duty amount .of Rs. 78,841/-, which came to be deposited, as noted above. Since the manufacture of the excisable goods was not accounted for in the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued under these rules with intent to evade payment of duty, - then all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or rupees ten thousand, whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice." The penal provisions of Rules 25 and 26 of the said Rules owe their genesis to sub-section (4) of Section 37 of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rules or the notifications issued thereunder "with intent to evade payment of duty". It will be noticed that, while Section 11AC speaks of contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, clause (d) of Rule 25(1) contemplates contravention of any of the provisions of the Rules or the notifications issued there under with intent to evade payment of duty. On a combined and harmonious reading of Section 11AC of the said Act and Rule 25 of the said Rules, which obviously cannot be interpreted to take away the rigour of Section 11AC in respect of the cases which fall under clause (d) of Rule 25(1), it would appear that, the maximum liability to pay penalty not exceeding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest payable under Section 11AB within 30 days from the date of the communication of the order of the Central Excise Officer determining such duty. The determination of duty under Section 11A(2) is required to be done in all cases falling under Section 11A(1) both with and without mens rea. The first proviso to Section 11AC does not confine its benefit to contraventions of the provisions of the Act or the Rules with intent to evade payment of duty, but would apply even in cases where such mens rea is absent and there are contravention of the provisions of the Act and the Rules as covered by clauses (a), (b) or (c) of Rule 25(1). The opening words of Rule 25 make it clear that, the provisions made thereunder are subject to the pro visions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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