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TMI Blog2017 (5) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... sparent in all its deeds, acting as a model to others. No materials are brought before this Court to interfere with the quantum of penalty as well - penalty upheld. Appeal dismissed - decided against appellant. - C.E.Appeal.No. 15 of 2016 - - - Dated:- 12-4-2017 - MR. P.R.RAMACHANDRA MENON, AND P. SOMARAJAN, JJ. For The Appellant : M. Gopikrishnan Nambiar, P. Gopinath, P. Benny Thomas, K. John Mathai, Joson Manavalan, Kuryan Thomas and Sandeep Gopalakrishnan For The Respondent : . P.R. Sreejith, SC and Sreelal N. Warrier, SC JUDGMENT P.R. Ramachandra Menon, J. Imposition of Excise Duty, Interest and Penalty in terms of Sections 11A, 11AB and 11AC respectively of the Central Excise Act, 1944 pursuant to sale of 42262.5 Kg of Mercury, on closure of the Mercury Cell Processing plant in the year 2004 (where Caustic soda was being manufactured by the appellant Company), is the subject matter of consideration in this appeal. 2. The case projected by the appellant is that the Mercury procured and used in the Mercury Cell Processing Plant was without availing any CENVAT Credit and it is the said exact quantity that has been recovered/retrieved on closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale of Mercury as above, Annexure A Show-Cause notice dated 31.08.2005 was issued by the authorities of the Department, asking to explain why duty amounting to ₹ 17,78,406/- together with interest and penalty thereon shall not be mulcted upon the appellant, in terms of Sec.11A of the Central Excise Act, 1944 r/w. Section 11AB and Sec.11AC of the said Act and Rule 25 of the Central Excise Rules, 2002. On receipt of the said notice, a detailed reply by way of Annexure B dated 03.10.2005, was preferred by the appellant. After giving an opportunity of hearing, the Joint Commissioner passed Annexure C order dated 03.04.2006 rejecting the contentions and sustaining the demand for duty, interest and penalty. 5. On being aggrieved of Annexure C order, an appeal was preferred before the Commissioner of Central Excise, Customs and Service Tax (Appeals), who declined interference as per Annexure D order dated 28.12.2006. This made the appellant to move further, in turn filing second appeal before the Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. After considering the matter, the Tribunal confirmed the impugned order and the appeal was dismissed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is also stated as not correct or sustainable. It is further contended that imposition of penalty under Section 11AC of the Central Excise Act, 1944 is not correct or proper. Though penalty may be mandatory under section 11AC of the Act, the quantum of penalty to be imposed is discretionary and depends upon the facts and circumstances. In the instant case, it is contended that the penalty mulcted upon the appellant is grossly disproportionate to the nature of the offence alleged. 9. The learned Standing Counsel for the respondent submits with reference to the contents of the counter affidavit that there is absolutely no merit or bonafides in the stand taken by the appellant and that at no point of time, had the Department contended that there was manufacture of Mercury in the appellant's establishment. When the appellant stopped production of Caustic Soda in the Mercury Cell Processing Plant, they had a stock of 42262.5 kg of Mercury in the plant. In the Mercury Cell Processing Plant, Sodium, on reacting with Mercury results in the formation of an amalgam, will be subsequently subjected to Hydrolysis, liberating Mercury, on formation of Sodium Hydroxide. It is also an admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this Court, that no CENVAT credit was availed by the appellant on the Mercury purchased, was never mooted before the Original/Appellate authorities and hence it is not liable to be considered. On the other hand, there is a clear admission as well, to the effect that the appellant had availed CENVAT credit on the purchase of Mercury. This being the position, it is stated as squarely covered by the verdict passed by the Apex Court in Lord Chloro Alkali Ltd. vs. Commissioner of Central Excise [2015 (322)E.L.T. 823(SC)]. 12. On coming across the sale of Mercury without paying any duty or without raising any invoice, Annexure A Show-cause notice was issued, referring to violation of the relevant provisions of law. The actual value of Mercury was worked out on the stock of 42262.5 kg at the selling price rate of ₹ 260/- per kg plus loading charges of ₹ 126787/- and computing 16% of the same, leading to fixation of duty payable as ₹ 1778406/-. It was accordingly, that the said duty was demanded in terms of Sec.11A of the Central Excise Act, 1944, plus interest under Section 11AB of the said Act and also penalty of an equal amount, under Section 11 AC of the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable on such goods at the rate applicable to such goods on the date of such removl and on the value determined for such goods under section 4 or section 4A of the Act, as the case may be, and such removal shall be made under the cover of an invoice referred to in rule 7. It is true that the Tribunal has made an observation in Annexure E order (paragraph 5.2 of Annexure E order ) that the appellant during hearing had submitted that they had not taken any CENVAT Credit in respect of the Mercury involved, but the facts on record did not throw any light whether the appellant had actually taken any CENVAT Credit or not. There is a case for the appellant that the Department had no such case to the contrary and no such proposition was put forth in Annexure A show-cause notice. As it stands so, it is argued that the Tribunal has exceeded in its jurisdiction, which ought not to have been the proper course, in view of the law declared by the Supreme Court in Chevalier I.I. Iyyappan and another vs. The Dharmodayam Co., Trichur [ AIR 1966 SC 1017] , it being an attempt to traverse beyond dispute and to bring in fresh facts. The said proposition does not impress this Court much, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit on the input Mercury. As it stands so, it is squarely covered by the verdict passed by the Apex Court in Lord Chloro Alkali Ltd. vs. Commissioner of Central Excise [2015 (322) E.L.T. 823(SC)] and the fixation of liability towards Duty, Interest and Penalty does not warrant interference. 15. Coming to the quantum of penalty imposed, it is true that an equal amount of duty has been fixed as penalty payable. No mitigating circumstance is brought to the notice of this Court as to the unhealthy financial status of the Company, if any, or such other adverse circumstances prevailing at the relevant time or even as on date. It also remains as an admitted fact that large quantity of Mercury was sold by the Company on decommissioning of the Mercury Cell Processing Plant in 2004 (42262.5 kg) and such sale was without any invoice. The appellant, being a Government Company, ought to have been more prudent and transparent in all its deeds, acting as a model to others. No materials are brought before this Court to interfere with the quantum of penalty as well. This Court finds that the law stands already declared by the Apex Court, which in fact has been applied to the given set of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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