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TMI Blog2009 (6) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions :- "Whether the Hon'ble CESTAT was justified in setting aside the penalty imposed under Section 11AC which is required to be equal to the duty confirmed by the Tribunal? Whether in case of clandestine removal of goods the payment of part of duty subsequently made on notice by the department prior to issue of show cause can discharge the Respondent from the rigour of provisions of Section 11AC of Central Excise Act, 1944?" 2. The facts are not disputed. A show cause notice was issued on 9th January, 2001. A reply was filed to the said show cause notice. The A.O., by his order dated 26th August, 2002 demanded duty and also imposed penalty. It may be mentioned that the respondents before issuance of the show cause notice had paid an amount of Rs. 66,096/- towards the differential duty amount. The A.O., found that there was a balance amount of Rs. 3,888/-. The Respondents aggrieved preferred an Appeal before the Commissioner (Appeals), who upheld the order in Original and dismissed the Appeal preferred. 3. The Respondents aggrieved preferred an Appeal before the CESTAT. The learned Tribunal [2006 (199) E.L.T. 331 (Tri. - Mum.)] was of the view that the offence is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard learned Counsel. In so far as mandatory penalty is concerned, the law stands now concluded in Dharamendra Textile Processors (supra). The law as now settled is that there is no jurisdiction in the authority to impose penalty lesser than the mandatory penalty which has to be co-extensive with the duty which is payable. The Supreme Court has further held that there is no requirement of existence of mens rea. Mens rea as understood in criminal law is not an essential ingredient for holding a delinquent liable to pay penalty for a tax delinquency which is a Civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. 8. Having so said we may now consider the first limb of argument as raised by the learned Amicus Curiae. The relevant portion of Section 11A of Central Excise Act, 1944 reads as under :- "11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p for consideration before the Supreme Court in Rajasthan Spinning Weaving Mills Ltd. (supra). It is necessary to reproduce paragraphs 2 and 15, which read as under :- "2. What are the conditions and the circumstances that would attract the imposition of penalty under Section 11AC of the Central Excise Act ("The Act" hereinafter)? In the two cases before us the Tribunal has taken the view that there was no warrant for levy of penalty since the assessees had deposited the balance amount of excise duty (that was short paid at the first instance) even before the show cause notice was issued. On the other hand, on behalf of the Revenue, the appellants in the two appeals, it was contended, relying upon a recent decision of this Court in Union of India v. Dharamendra Textile Processors, 2008 (231) E.L.T. 3 (S.C.) that mere non payment or short payment of duty (without anything else) would inevitably lead to imposition of penalty equal to the amount by which duty was short paid. In our view the reason assigned by the Tribunal to strike down the levy of penalty against the assessees is as misconceived as the interpretation of Dharamendra Textiles is misconstrued by the Revenue. We comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a.2 of the judgment which we again reproduce and which reads as under :- "We completely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can after the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act." 13. It is, therefore, clear that though the Supreme Court has not expressly referred to the argument now advanced by the learned Amicus Curiae, nevertheless the Supreme Court was clear that to impose penalty the conditions in Section 11AC of the Act must be complied with. Under Section 11AC as already set out the requirements are firstly, that there must be intent to evade payment of duty and secondly the duty ought to be as determined under sub-section (2) of Section 11A. It is, therefore, clear that it is only on these two requirements being followed that penalty is imposable. The determination of duty admittedly is under Section 11A. The other limb of argument is that once the duty is paid even before the show cause notice, the question of the A.O. in a case where duty demanded has been paid there will be no determination of liability. In our opinion, the argument is fal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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