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TMI Blog2016 (4) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed vide Order-in-Original dated 30/31st October, 2001 under Section 173(Q) of the Central Excise Rules, 1944 is not leviable for the periods for which the penalty is imposed, i.e. from December, 1998 to December, 2001. Factual Matrix of the case 2. The respondent is a manufacturer of Tractor. Under the Automobile Cess Rules, 1984 enacted under Section 30 of Industries (Development and Regulation) Act, 1951, the respondent was liable to make the payment of Automobile Cess. 3. As the aforesaid Automobile Cess was not paid for different periods, different notices were given. The details of the show-cause notices, the period, the number of tractors and Automobile Cess payable are as under: Sl No. Show cause notice & date Period Qty. No of tractor Automobile cess payable 1. SCN/Telco-1/12/99/101 8 dated 02.07.99 December 98 to April, 99 117 Nos. Rs. 86,360.75 2. SCN/23/Telco-1/99/163 2 dated 03.11.1999 May, 99 to September, 99 203 No.s Rs. 1,53,188.64 3. SCN/Telco-1/5-11A/200 0/400 dated 04.04.2000 October, 99 to February, 2000 201 Nos. Rs. 1,61,046.03 4. SCN/Telco-1/14-11A/20 00/965 dated 25.08.2000 March, 2000 to July, 2000 440 Nos. Rs. 3,41,807.71 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appellant in Order-in-Original, which was confirmed in Order-in-Appeal, as there was no specific penalty provision. Being aggrieved and dissatisfied by the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata these appeals have been preferred by the appellant. Argument canvassed by the counsel appearing for the appellant : 7. Counsel appearing for the appellant vehemently submitted that no error has been committed by the appellant in imposing the penalty under Section 173 (Q) of the Central Excise Rules, 1944 because under Rule 3 of the Automobile Cess Rules, 1984 the provisions of Central Excise Act, 1944 and the Rules made thereunder are applicable to the levy and collection of Automobile Cess. Thus, if there is non-payment of Automobile Cess under Automobile Cess Rules,1984 enacted under Section 30 of the Industries (Development and Regulation) Act, 1951 the provisions of the Central Excise Act and Rules are applicable. There is no need for separate mentioning of penalty under Automobile Cess Rules. This aspect of the matter has not been properly appreciated by the CESTAT, Kolkata while allowing the appeals preferred by the respondent. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t incidental to the assessment nor it is a mere consequence of the assessment. Penalty is an addition to the tax or is an addition to the liability and therefore, there must be a provision for penalty and there is no provision of penalty under the Automobile Cess Rules, 1984 nor under the Parental Act, i.e. under the Industries (Development and Regulation) Act, 1951 and therefore, penalty cannot be imposed upon the respondent. There must be a specific provision for imposition of the penalty. 10. Counsel for the respondent further submitted that Rule 3 of the Automobile Cess Rules, 1984 is only for the purpose of following the procedure of the Central Excise Act and Rules made thereunder for the levy and collection of the Cess, but so far as the penalty is concerned there bound to be specific provision under the rules or under the parental Act and if there is no specific provision for imposition of penalty, the same cannot be imposed by the appellant under Rule 173 (Q) of the Central Excise Rules, 1944. 11. Counsel appearing for the respondent has relied upon the decision rendered by Hon'ble the Supreme Court in Khemka & Co. (supra) as well as the judgment rendered by Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall pay, in addition to the duty, interest at such rate not below ten per cent, and not exceeding thirty-six per cent. Per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette on such duty from the date immediately after the expiry of the said period of three months till them date of payment of such duty........................ .............................................................................." (Emphasis Supplied) (c) Rule 173 (Q) of the Central Excise Rules, 1944 reads as under :- "Rule [173 Q. Confiscation and penalty.- (1) If any manufacturer, producer or [registered person] of a warehouse,- (d) contravenes any of the provisions of these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the manufacturer, producer or [registered person] of the warehouse, as the case may be, shall be liable to a penalty not exceeding three times the value of the excisable goods in respect of which any contravention of the nature referred to in clause (a) or *** [clause (b), or clause(bb) or clause (c) or clause (d) has been committed, or five thousand rupees, whichever is gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under Sections 270 and 271. These sections in the Income Tax Act provide for imposition of penalty on contumacious or fraudulent assessee. Penalty is in addition to income tax, if any, determined as payable by the assessee. Tax and penalty like tax and interest are distinct and different concepts under the Indian Income Tax Act. The word "assessment" could cover penalty proceedings if it is used to denote the whole procedure for imposing liability on the taxpayer as happened in Abraham's case (supra). Penalty is within assessment proceedings just as tax is within assessment proceedings when the relevant Act by substantive charging provision levies tax as well as penalty. 25. Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income-tax Act, 1922 where penalty is provided for concealment of income. Penalty is in addition to the amount of income-tax. This Court in Jain Brothers v. Union of India said that penalty is not a continuation of assessment proceedings and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a continuation of the assessment proceeding. In fact, penalty is a statutory liability. For imposing penalty, there bound to be provision for penalty under the Automobile Cess Rules, 1984, but, in fact, looking to Automobile Cess Rules, 1984, there is no such provision for imposition of penalty nor there is any provision of penalty under the parental Act, i.e. Industries (Development and Regulation) Act, 1951 and hence penalty cannot be imposed under Section 173 (Q) of the Central Excise Rules, 1944. (IV) There is already a provision for the payment of interest under Section 11AA of the Central Excise Act, 1944, as was prevailing at the relevant time if the duty is not paid within a period of three months after the assessment the interest, minimum at the rate of 10 % and maximum at the rate of 36%. As stated herein above, after adjudication of the liability after order dated 30/31 October, 2001, i.e. after order-in-Original was passed by the Additional Commissioner, Central Excise, Jamshedpur. Respondent-assessee has already paid Automobile Cess on 7th January, 2002, 8th January, 2002 and on 5 th February, 2002. (V) It has been held by Hon'ble the Supreme Court in Orient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging Section to create liability. There must be first a liability created by the Act. Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act."' (Emphasis Supplied) (VI) In view of the aforesaid decision also penalty cannot be imposed without there being specific provision for the penalty despite Rule 3 of the Automobile Cess Rules. 1984. Rule 3 of the Rule of 1984 cannot be operated for imposition of penalty because penalty partakes the character of additional tax. Penalty is not incidental to the process of assessment. It is in fact additional statutory liability and unless there is specific provision for penalty, the same cannot be inferred from Rule 3 of the Automobile Cess Rule, 1984. (VII) It has been held by the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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