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TMI Blog2017 (2) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... CER - the finding arrived by the Tribunal that penalty is not imposable in view of the fact that the appellant would not fall within any of the four categories enumerated u/r 25 of the CER cannot be said to be erroneous. The factum of non-raising of invoice had come to light only due to the surprise inspection conducted by the Department - There was no revenue loss to the exchequer. However, mere payment of duty before issuance of show cause notice would not preclude the Department, from levying redemption fine, once the factum of evasion of duty is made out, be it mala fide or not. Levy of redemption fine on the goods manufactured by M/s.Sri Krishna Alloys for being used as raw materials at the hands of the appellant, could not be termed as erroneous or an unjustified act. Appeal dismissed - decided against appellant. - C. M. A. No. 151 of 2010 - - - Dated:- 13-2-2017 - Huluvadi G. Ramesh And Anita Sumanth, JJ. For the Appellant : Mr. Mr. K.Jayachandran For the Respondents : Mr. S.Rajasekar for R-2 JUDGMENT Huluvadi G. Ramesh, J. The present appeal is directed against the order passed by the 1st respondent, viz., Customs, Excise Service Tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o issued on M/s. Sri Krishna Alloys. 5. After receipt of reply from M/s.NGA Steels as well as M/s.Sri Krishna Alloys and after affording an opportunity of personal hearing and on the basis of the written submission filed by the parties to the lis, the assessing officer held that it was a fit case for imposing penalty and, accordingly, the following order was passed :- (i) I confirm and demand the duty amount of ₹ 2,00,263/- (Rupees Two Lakhs Two Hundred and Sixty Three only) (Cenvat ₹ 1,96,336/- and Edu. Cess ₹ 3,927/-) under Section 11A (1) of the Central Excise Act, 1944. (ii) I demand appropriate interest on the above duty amount under Section 11AB of the Central Excise Act, 1944. (iii) I confiscate the 67.475 MT of M.S. Ingots valued at ₹ 12,27,100/- seized under a mahazar on 27.12.2006 and deposited for safe custody with M/s.NGA Steels Private Ltd., in terms of Rule 25 of the Central Excise Rules ibid. However, in exercise of the power conferred by Section 34 of the Central Excise Act ibid, I give M/s.NGA Steels Pvt. Ltd., an option to pay a fine of ₹ 3,06,775/- in lieu of confiscation. (iv) I impose penalty of ₹ 2,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the appellant herein does not fall under any of the four categories covered by the said Rule and, therefore, imposition of penalty on the appellant was not justified. Aggrieved against the order of the Tribunal in confirming the redemption fine, while setting aside the penalty imposed under Rule 25 of the Central Excise Rules, the appellant is before this Court with the present appeal. 8. This Court, while admitting the appeal, framed the following substantial questions of law for consideration :- i) Whether in the facts and circumstances of the case, the Tribunal is right in confirming the fine in lieu of confiscation, especially when it was held that Rule 25 of Central Excise Rules is not covered to the present case? ii) Whether the Tribunal can confirm the order of confiscation empowering the authorities to impose fine in the absence of Rule 25 of Central Excise Rules 9. Learned counsel appearing for the appellant submitted that the violation observed by the authorities of the 2nd respondent is only a procedural irregularity and it cannot be construed as an act to defraud the exchequer of its rightful share by way of levy of duty. It is the furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rishna Alloys. It is the submission of the learned counsel for the Department that when a particular thing has to be done in a particular manner, as envisaged under the statutory rules in force, non-compliance with the said statutory provision has to be put against the perpetrator. It is the further submission of the learned counsel for the Department that the Tribunal, though has rightly confirmed the redemption fine imposed on the appellant, however, has set aside the penalty on the ground that the appellant does not fall under any of the four categories envisaged under Rule 25 of the Central Excise Rules. The said finding of the Tribunal, is per se erroneous and is against the very spirit of the provision. Rule 25 of the Central Excise Rules contemplates confiscation and penalty on the producer, manufacturer, registered person of a warehouse or a registered dealer for contravention of certain provisions as mandated thereunder. The appellant, being a producer of M.S. Rods and Bars, has received M.S. Ingots from M/s. Sri Krishna Alloys for manufacturing purposes. Such being the case, Rule 25 would stand squarely attracted to the case of the appellant and the finding of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the four categories adumbrated under Rule 25 of the Central Excise Rules, whereas the 2nd respondent/Department contends that the goods, viz., M.S. Ingots, having been manufactured/produced by M/s. Sri Krishna Alloys would not fall within the meaning of sale to the appellant, as the materials were sent to the appellant without raising any invoice and, therefore, the custody of the materials at the hands of the appellant, could, at best, be termed as safe custody. Therefore, the act of manufacture/production being there at the initial point, i.e., at M/s. Sri Krishna Alloys, the same would fall under Rule 25 of the Central Excise Rules and, therefore, if the seized materials were received by the appellant, for the purpose of production of M.S. Bars and Rods, for which the basic input is M.S. Ingots, the same could be taken by the appellant by payment of redemption fine, as the appellant was also in collusion with M/s.Sri Krishna Alloys in the matter of clandestine removal of the inputs. Therefore, levying of redemption fine could not be said to be erroneous. It is further contended that the appellant having acted with mala fide intention and in collusion with M/s. Sri Krishna A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined : (Emphasis Supplied) [Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty so determined : Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account : Provided also that in case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a plausible explanation so as to brush aside the stake of the department to its rightful share of duty claim. If something needs to be done in a particular manner, as is mandated under the relevant provision of law, it needs to be done in the said manner and trying to do the same in any other manner than the one contemplated under the law is trying to make mockery of the statutory provision, which is embodied under the Act. However, this Court refrains from expressing any further opinion on the issue, except to state that the appellant cannot wriggle out from under in the guise of trying to assert that there was no intention to evade duty. Though confiscation of the material was not made at the premises of M/s.Sri Krishna Alloys, but made at the premises of the appellant, the appellant being a person holding safe custody of the materials, without there being any valid invoice for receipt of the same as raw material, if wishes to retain the confiscated materials, could redeem the same on payment of fine, as has been ordered. 20. In the case on hand, the the appellant having received the materials and stored the same within its factory premises without valid invoice, can be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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