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TMI Blog2019 (1) TMI 1377X X X X Extracts X X X X X X X X Extracts X X X X ..... nue also. In case of delay in submission of proof of export, Revenue itself should have asked for recovery of duty in terms of the bond executed. In case they have failed to monitor the submission of proof of export, the appellant cannot be saddled with the responsibility of suppression of fact. The penalty under Rule 25(1)(d) would be imposable but not equivalent to the amount of duty short paid - Since the provisions of section 11AC are not attracted in the present case, in our view, the ends of justice will be met if the penalty imposed is reduced to ₹ 5,00,000/-. The appeal of the appellant partly allowed to the extent of reduction of penalty to ₹ 5,00,000/-. - APPEAL Nos. E/993,997/2010, E/CO/30/2010 - A/88277-88278/2018 - Dated:- 5-9-2018 - Dr. D.M. Misra, Member (Judicial) And Mr. Sanjiv Srivastava, Member (Technical) Shri Ajay Kumar, Additional Commissioner (AR), for Revenue Shri R.M. Patkar, Consultant, for appellant-assessee ORDER Per: Sanjiv Srivastava Of the two appeals under consideration, one has been filed by the Revenue and one by the appellant party against order-in-appeal No. AKP/71/NSK/2010 dated 11.3.2010 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 71 50,39,999 8,05,282 58,54,281 5. Upto Sep 2007 74 24,25,026 3,17,581 27,42,607 Total 2,63,06,087 57,38,045 3,20,44,132 3.3 Thus a show cause notice for imposition of penalty under Rule 25(1)(d) for allege contravention Rules 4, 6, 8, and 19(1) of the Central Excise Rules, 2002 read with Notification No.42/2001-CE(NT) dated 26.6.2001 and para 13.6 of Chapter 7 of CBEC s Manual, was issued to the appellant. 3.4 Appellants responded to the show cause notice stating that due to heavy rains on 26th July 2005, the entire area where the godown is situated in Bhiwandi was flooded, resulting in total loss of goods and various documents stored in the godowns. Thus various consignments stored in the godown awaiting export shipments could not be exported being fully damaged. Since all the documents maintained in the godown were also destroyed it took some time to ascertain the quantum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh determination; vi. since they had no intention to evade payment of duty and all the facts in respect of exportation of the goods were in the knowledge of the department the appellant cannot be charged for suppression with intent to evade payment of duty for the purpose of penalty equivalent to duty under Rule 25(1)(d) of the Central Excise Rules read with Section 11AC of the Central Excise Act. 5.2 Arguing for the Revenue, learned AR submitted that- i. in the present case the goods were cleared over a very long period of time starting from 2002-03 to September 2007. For the goods cleared over a period of nearly five years, the appellant had not submitted proof of export, or had paid duty in respect of the said ARE-1 s; ii. it was only subsequently that they paid the amount along with interest. iii. the act of non-submission of proof of export within a period of six months from the date of clearance of the goods and non-payment of duty due in respect of these goods immediately after the expiry of six months or any extended period allowed by the Assistant Commissioner cannot be condoned; iv. in this case where delay is shown ranging upto five years, the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. From the said chart the details of payment made are extracted in the table in para 3.2 supra. 6.5 It is seen that the appellant has been regularly not submitting the proof of export as required under law. The delay in effecting the exports or not exporting the goods cannot be just on account of floods as claimed by the appellant. Commissioner (Appeal) has in his order para 14 observed 14 .. From the records it is seen that the appellant had paid duty in respect of goods exported during the period from 2003-04 upto September 2007. The argument of appellant that the goods were destroyed due to occurrence of flood on 26.05.2005 is of no help to them for the goods cleared for export during the period from 2003-04, 2004-05 and also after 26.05.2005 till September 2007. The appellants had not only failed to export the goods within six months, but they also did not bother to apply to divisional DC/AC for granting extension of time for export of goods. Not to talk of request for extension, the appellant did not even intimate to the DC/AC about non export of goods. This is not only contravention of rules but total disregard to the conditions prescribed to avail the facilities exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty for the purpose of invocation of Section 11AC of the Central Excise Act, 1944. In the case of failure to export the goods the duty along with applicable interest is required to be paid/ recovered from the appellant in terms of the bond/ LUT executed by them for effecting exports under Rule 19. 6.8 In case of Punjab Tractors, Hon ble Supreme Court has held 5.The learned Counsel appearing on behalf of the respondent department, however, contends that this might tantamount to condoning the violation of the excise rules by assessee with impunity. We make it clear that for the admitted violation, the appellant will undoubtedly be liable to pay the penalty as prescribed under the rules for such violation. 6.9 Since contraventions have occurred, we hold that penalty under Rule 25(1)(d) would be imposable but not equivalent to the amount of duty short paid. In the case of Rajasthan spinning and Weaving Mills - 2009 (238) ELT 3 (SC), the Hon ble Supreme Court has explained the decision in case Dharmendra Textile Processors, supra referred to by the learned Authorized Representative stating that mandatory penalty under Section 11AC can be invoked only when the ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared that - (1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President; (1) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.] 17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to subsection 1 of Section 11A and Section 11AC use the same expressions : ....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,... . In other words the conditions that would extend the normal period of one year to five years would also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assessee on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act ) taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the Rules ) and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT Act, Section 11AC of the Act and Rule 96ZQ(5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated which he knows or has reason to believe . The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for discretion but that is not the case here. 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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