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TMI Blog2016 (6) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27th October 2015 passed by the Customs, Excise and Service Tax Appellate Tribunal ('CESTAT') in Appeal Nos. E/2126/2009 & E/2149/2009 filed by the Respondents. 3. By the impugned order, the CESTAT allowed the appeals and set aside the Order-in-Original dated 27th March 2009 passed by the Commissioner of Central Excise imposing penalties on the Respondents and requiring them to pay redemption fine in lieu of confiscation of the goods. 4. The case against the Respondents, as set out in the Show Cause Notice ('SCN') dated 16th November 2007, is that in a search conducted in their premises on 27th June 2007 they were found in possession of the excess stock of copper rods and copper ingots which had not been accounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house or an importer who issues an invoice on which CENVAT credit can be taken 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 two thousand rupees, whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice." 6. In the impugned order, the CESTAT has held that since there were no findings by the adjudicating authority as regards violation of Section 11AC of the Central Excise Act, 1944 ('CE Act'), Rule 25 of the CE Rules could not have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Union of India 2012 (276) ELT 48 (Guj.) to urge that the CESTAT's interpretation of Rule 25 of the CE Rules in the instant case merits acceptance. 9. The opening words of Rule 25 is "Subject to the provisions of Section 11AC of the CE Act" and not an non-obstante clause which would have begun with the words "Notwithstanding the provisions of Section 11AC of the CE Act". It is plain that the CE Rules are subordinate legislation and have to abide the discipline of the statute under which they are made. Where Rule 25(1) expressly begins with "Subject to the provisions of Section 11AC of the CE Act", obviously the requirements of Section 11AC will have to constitute a condition subject to which the power under Rule 25 can be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 of the Central Excise Rules." 10. In other words, if the ingredients of Section 11AC are not shown to be fulfilled, the penalty under Section 11AC cannot be levied. Therefore, given the wording of Rule 25 of the CE Rules, the ingredients mentioned in Section 11AC have to be considered before determining the question of penalty. In the instant case it is not in dispute that the show cause notice ('SCN') made no reference to Section 11AC and, therefore, there was no occasion to adjudicate the issue of imposition of the penalty under Section 11AC of the Act. 11. In Prince Multiplast Pvt. Ltd. (supra) the Gujarat High Court was considering Rule173Q of the Central Excise Rules 1944 (CE Rules 1944) which begins with the expression "s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no discussion of the expression "subject to Section 11AC" occurring in Rule 25 of the CE Rules, 2002. As far as the decision in Dayal Alloys (supra) is concerned, the High Court there was interpreting the unamended Rule 173Q of the CE Rules, 1944 which did not open with the words "subject to Section 11AC". Therefore, the said decision too is of no assistance to the Appellant herein. Likewise, when this Court dismissed the appeal against the decision of the Full Bench of the CESTAT in Commissioner of Central Excise, Delhi v. Ganpati Rolling Pvt. Ltd.(supra) as withdrawn, there was obviously no occasion to consider any of the above decisions of the Gujarat High Court, which in the considered view of the Court merit acceptance. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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