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TMI Blog2017 (6) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ant by not adopting CAS-4 valuation for as many as 22 months is nothing but a deliberate undervaluation with the intention of evading full duty liability required to be discharged under law. The acts and omissions of the appellant in this case are very much acts of fraud with intent to evade payment of duty. A continued hiatus of "twenty two" months can in no way explain the conduct of the appellant. Discernably therefore, the appellants knowingly and willfully adopted lesser assessable/transaction value in contravention of Rules 4 60,18,344/- calls for levy of penalty. All the provisions of Section 11AC ibid will apply to this case, hence there cannot be any discretion in the imposition of penalty equal to the differential duty determined. Appeal dismissed - decided against appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 40 of adjudication order is reproduced below: Clearance period Amount paid TR-6 Challan No. & Date Apr. 03 Sept. 04 52,56,297 12/04-05, dt-18.01.2005 Feb. 03 & Mar. 03 3,55,910 14/04-05, dt-05.02.2005 Oct. 04 & Nov. 04 4,06,137 -do- 60,18,344 2.4 On the above factual background appellant says that it had no intention of causing any loss to Revenue. Having discharged the duty element, it is not liable to penalty of ₹ 60,18,344 levied under section 11 AC of the Central Excise Act, 1944. According to the appellant, elements of section 11AC are not present and that too the CAS-4 having coming into force at a later date, there should not be levy of penalty. Ld. Advocate, relies on the decision of the apex court s judgment in the case of Union of India Vs Rajasthan Weaving and Spinning Mills reported in 2009 (238) E.L.T. 3 (S.C.) to say that unless any of the elements of section 11AC of the Central Excise Act, 1944 is present, there shall not be penalty. 3. Revenue represented by Shri K.Veerabhadra Reddy (JC) AR, contends on the other hand that appellant was conscious of the applicability of the Circular dated 13.02.2003 to value the tools cleared to the job wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty/five percent. of the consequential in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of any of the provisions of this Act or the Rules made thereunder, with intent to evade payment of duty (iii) If any of these ingredients are present, the person who is liable to pay duty as determined under sub-section (2) of Section 11A ibid, shall also be liable to pay a penalty equal to the amount of duty so determined. (iv) We do not find any room or liberty under Section 11AC for any discretion in the quantum of penalty. The section has very clearly laid down that when all the aforementioned conditionalities are satisfied, the person who is liable to pay duty as determined shall also be liable to pay penalty equal to the duty so determined. 8.1 The Jurisdictional High Court of Madras in the case of Arun Vyapar Udyog Pvt. Ltd. Vs CESTAT Chennai 2014 (306) ELT 130 (Mad.) has held that discharge of duty liability before issuance of show cause notice is immaterial for application of Section 11AC. The relevant paras of the said judgment are reproduced as under : "6. The Honourable Supreme Court in the decision of Union of India (supra) held that payment of differential duty, whether before or after the show cause notice is issued, cannot alter the liability for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was wilful intention to evade payment of duty. 7.. In the light of the above discussion, the question of law raised by the appellant viz., whether penalty and interest are leviable when duty has been paid before issuance of show cause notice has to be necessarily answered against the appellant in the light of the judgment of the Supreme Court in Union of India v. Rajasthan Spinning & Weaving Mills [2009 (238) E.L.T. 3 (S.C.)]. As regards the contumacious conduct of the appellant in wilfully evading payment of duty, we find no reason to interfere with the factual finding recorded by the Appellate Authority and confirmed by the Tribunal. 8.2 The Hon'ble Supreme Court has, on more than one occasion, considered the scope and extent of Section 11AC. In their land mark judgement in the case of Union of India Vs Dharmendra Textile Processors 2008 (231) ELT 3 (SC), the Apex Court held that no discretion is available on quantum of penalty under Section 11AC of the Central Excise Act, 1944. The Apex Court held that mens rea is immaterial for application of the Section 11AC of the Act. Authority imposing penalty has no discretion to reduce or waive penalty under any of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can alter the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act." 8.5 The ratio propounded in Dharmendra Textile and Rajasthan Spinning & Weaving Mills judgements (supra) was relied upon subsequently also by the Apex Court in their following judgements: (1) CCE Mumbai Vs Sunil Silk Mills 2011 (267) ELT 438 (SC) (2) CCE Kolkata Vs Praxair India Pvt. Ltd. 2012 (278) ELT 579 (SC) 8.6 The ratio of Dharmendra Textile Processors (supra) was also followed in a very recent judgement of Supreme Court in the case of CCE Chandigarh Vs Stesalit Ltd. 2017 (3470E TL 385 (SC). The Supreme Court once again reiterated that under Section 11AC of the Central Excise Act, 1944, there was no discretion to reduce quantum of penalty. The Hon'ble Apex Court observed as follows :- "14. As rightly argued by the learned counsel for the appellant, the issue urged herein was examined by three judge Bench of this Court in Union of India &Ors. v. Dharamendra Textile Processors &Ors. (supra). It was a reference made to examine the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal reasons for reducing the penalty amount." 9.1 To judiciously apply the above interpretation and settled law in respect of Section 11AC ibid, to the matter before us, the following aspects need to be critically examined : (i) Whether the valuation was made in accordance with CAS-4 . (ii) Whether there was undervaluation of the assessable value for not following CAS-4 . (iii) Whether undervaluation was deliberate. (iv) Whether there was deliberate short payment of duty resorting to undervaluation of assessable value . (v) Whether the deliberate undervaluation has resulted prejudice to the interest of Revenue and amounts to a fraud . (vi) Whether penalty under Section 11AC is leviable. If so, the quantum of penalty leviable. 9.2 From the facts of the appeal, it is clear that period of dispute is April 2003 to November 2004. Circular No.692/8/2003-CX. Dt. 13.02.2003 had been issued by the Board to mandate that assessable value should be worked out as per Cost Accounting Standard-4 (CAS-4) method of cost accounting for the goods manufactured by the assessee and cleared to their job workers. 9.3 However, during the entire period of dispute, the goods mou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by another's loss. It is a cheating intended to get an advantage". 9.8 In the case of T.Suryachandra Rao (2005) 6 SCC 149, the Hon'ble Apex Court observed as under : "By "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. 9.9 From the above, we are in no doubt that the conduct of the appellants will surely come within the ambit of "Fraud", with deliberate intention to deceive and cause prejudice to the interest of Revenue. 9.10 Viewed in this light, we find that all the provisions of Section 11AC ibid will apply to this case, hence there cannot be any discretion in the imposition of penalty equal to the differential duty determined. 10. Appellant's other plea is that for an earlier period, dispute on non-payment of duty liability to the tune of ₹ 1,29,62,003/- for the period Jan 1994-Dec 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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