9911796707
TMI Blog2024 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... orities - Principles of natural justice - principles of res-judicata. HELD THAT:- A careful perusal of the order of the first appellate authority reveals that the core issue before the appellate authority was the capacity of production of the concerned machine. The appellate authority, on the basis of the materials available for the authority, concluded that the capacity of the machine was 301-750 pouches per minute and which was a finding recorded by the adjudicating authority for the earlier periods. The subsequent order passed by the adjudicating authority vide order dated 27.11.2015, whereby the capacity of the machine was found to be above 751 pouches minute was held to be not based on correct information/evidence. The questions which are raised in the present petition are essentially questions of facts based on the records and the evidences available before the Departmental authorities. There is no dispute that for several periods earlier the petitioner filed in the proper form the speed of the packing machines and which was duly approved by the adjudicating authority. The first appellate authority by its order dated 30.08.2016 interfered with the order passed on 27.11.2015 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n duly considered by the respondent authority upon careful perusal of the impugned order. In COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. ABM INTERNATIONAL LTD. ANR. [ 2015 (8) TMI 1118 - SC ORDER ] on the question of principle of res judicata, the Apex Court held that it is not in dispute that the first round of litigation, the matter had come up to this Court and was decided in favour of the respondent assessee. While dismissing the appeal of the Revenue, considering the facts of this case, no doubt this Court left the question of law open. However, that could not be a ground to reopen the case of the Revenue. The Apex Court is therefore of the opinion that the Customs, Excise and Service Tax Appellate Tribunal has rightly applied the principle of res judicata. The first Appellate authority namely the Commissioner (Appeals) on the basis of the materials and records available with the department returned a clear finding on facts that there was no willful or deliberate suppression of material or information. The Commissioner (Appeals) returned a finding that there were amply opportunity prescribed under the provisions available to the adjudicating authority to make necessary enquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise in terms of the Notice issued under Section 11A (10) of the Central Excise Act, 1944 read with Rule 18 of the Pan Masala Packing Machines (Capacity of Determination and Collections of Duty) Rule, 2008 (hereinafter referred to as the Rule of 2008 ) as well as recovery of interest and penalty was imposed. The particulars in respect of each of the writ petitions will be discussed later in the Judgment. 2. Since W.P(C) No. 3864/2022 (Dharampal Satyapat Ltd) was argued by the respective counsel as the lead case, the facts relating to this particular case are discussed. The other writ petitions have similar facts and circumstances which will be referred to later in the judgment. 3. The writ petitioner in WP(C) No. 3864/2022 is a company incorporated under the Companies Act 1956, having its registered office in Delhi. The petitioner has an industrial unit in the city of Guwahati in the state of Assam. The petitioner is registered under the Central Excise Act 1944 and has registration number AAACD0132HXM030. The petitioner is engaged in the manufacture of Pan Masala . The said item, according to the petitioner, is classified under Tariff Entry 2106 90 20. The petitioner company is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise by order dated 17.01.2014. As is required under the Rules, similar declarations were filed till June, 2014 which were also approved by the Assistant Commissioner of Central Excise. 6. Subsequently, on 18.07.2014, the petitioner company submitted another declaration in terms of Rule 6 (6) of the Rules of 2008 before the Assistant Commissioner of Central Excise. In the said declaration, the petitioner company stated that w.e.f 26.07.2014, the petitioner company would be operating the machine for manufacture of Rajani Gandha Paan Masala 18 grams pouch with MRP 50/- per pouch at the speed of 1000 pouches per minute. The said declaration was duly approved by the Assistant Commissioner by its order dated 23.07.2014. The petitioner company continued to file similar declarations declaring the maximum packing speed of the machine as 1000 pouches per minute, though the machine was operated at a speed above 750 pouches per minute as operational efficiency at that speed was never achieved consistently. 7. It is submitted that although the declaration of maximum packing speed of the machines was made at 1000 pouches per minute, because of operational reasons, the company foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was further informed by the petitioner that in terms of the Rule 8 of the Rules, the petitioner would operate the machine for manufacturing limited quantity of Rajanigandha Pan Masala of 10 grams pouch at RSP 25/- per pouch to further explore the quality effectiveness of the machine with respect to the said product. The speed of the machine was declared in Form-1 as above 751 pouches per minute. 10. Pursuant to the communication of the petitioner company, the Assistant Commissioner of Central Excise by order dated 29.05.2015 approved the declaration of the petitioner company in Form-1 regarding speed of the machine as above 750 pouches per minute and allowing the manufacturing of the product by the petitioner company at RSP 25/- per pouch for operational reasons before finally un-installing and sealing the machine on 29.05.2015 at 23:55 hours under physical supervision of the Superintendent of Central Excise, Range IIA in terms of Rule 6 (5) of the Rules. 11. The petitioner company took up the issue of reviewing the performance of the machine with its supplier and manufacture namely Sanko Machinery Company Limited, Japan. The supplier after detailed review informed the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 held that the maximum packing speed of the machine falls within the slab of 301 to 750 pouches per minute. 16. Pursuant to the said order passed by the Assistant Commissioner of Central Excise, the petitioner continued to make declaration under the Rules of 2008 for operating the machine, declaring the maximum packing speed of the machine as 750 pouches per minute. All such declarations filed by the petitioner company where duly approved by the Assistant Commissioner of Central Excise by passing orders under the Rules and those orders have attained finality as no appeal under the statute was filed by the party. 17. It is submitted on behalf of the petitioner that inspite of change of the components in the machinery and it s trial run being carried on in the presence of the officials, the petitioner was surprised to receive a letter dated 18.11.2015 from the respondent No. 4, namely, Assistant Commissioner (Anti Evasion), Office of the Central Excise Service Tax Headquarter, Anti Evasion, Unit-1, GS Road, Bhangagarh, Guwahati. By the said letter, the petitioner company was informed about initiation of an enquiry in relation to the packing speed of the machine and thereby called up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority held that all declarations about the maximum speed of the machine were on record and nothing was mis- declared and the orders passed by the Assistant Commissioner of Central Excise from June, 2015 to October, 2015 have remained unchallenged and uncontested. It was held that the order dated 16.06.2015 was passed in accordance with the prescribed Rules after physical verification of the machine in presence of the departmental officers and departmental deputed Chartered Engineer and thus the said order could not be questioned by the Assistant Commissioner of the central Excise as a quasi judicial authority. It was held that if the machine was not in a condition to pack more than 750 pouches per minute, the determination of duty for higher quantity is bad in the eyes of law. Against the said order passed by the Commissioner of Appeal, the department preferred an appeal before the CESTAT, Kolkata and the said appeal was numbered as E/76891/2016-EX[DB] and the said appeal is stated to be still pending disposal before the CESTAT, Kolkata. 19. Thereafter, on 30.08.2016, the respondent No. 3 by summons dated 16.09.2016 directed Shri C. Roy Choudhury, who is an official of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Rule 18 of the Rules, 2008 and as to why interest at the appropriate rate should not be charged and realized under Section 11AA of the Central Excise Act, 1944 read with the proviso to Rule 9 of the Rule of 2008. The petitioner company was further asked to show cause as to why penalty as provided under Rule 17 of the Rules of 2008 read with Section 11 AC of the Central Excise Act, 1944 should not be imposed and further as to why an amount of Rs. 2,00,00,000/-voluntarily deposited by the petitioner should not be appropriated against the differential duty payable. 23. Pursuant to the said show cause notice, the petitioner submitted its reply disputing the claims made by the department in the show cause notice. The petitioner company questioned the correctness of the show cause notice issued on the ground that it was barred by limitation and consequently the show cause could not have been issued and no demand/penalty or interest was imposable on the petitioner company. The petitioner company in view of the reply submitted requested the respondent No. 2 to drop the proceedings initiated against the company. 24. The Principal Commissioner by order dated 24.03.2022 vide order-in-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Senior counsel for the petitioner submits that the Petitioner Company filed a detailed reply along with a synopsis submission during the course of hearing before the Principal Commissioner. However, the reply and synopsis although were taken on record but the same have not been dealt with while giving finding as can be seen from Discussion and Finding section of the order in original dated 24.03.2022. The Principal Commissioner, Respondent No. 2 herein has not considered the reply submitted by the Petitioner and has not returned any finding on the submissions made on behalf of the Petitioner. In the reply to the show cause notice, the Petitioner company specifically submitted that the period in dispute was covered by the order dated 16.06.2015, which was passed in accordance with Rules after the physical verification of the machines with the help of a Government registered Chartered Engineer and which has attained finality as no appeal has been filed by the Department and thus the case cannot be reopened again by issuing the show cause notice. This submission was not negated by the Respondent No. 2 and he has simply omitted any discussion on this part of the reply. 28. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow 750 PPM under supervision of the Departmental Officers vide orders passed by AC/DC and the said orders have attained finality as no appeal was filed by any party. It is submitted that the Respondent No. 2 therefore acted most illegally and arbitrarily in passing impugned order in respect of the matter which have already attained finality and the order in Original dated 24.03.2002 is therefore liable to be set aside and quashed. 32. The learned Senior counsel for the Petitioner submits that the show Cause notice dated 27.06.2020 was nothing but a second and unwarranted attempt to reopen the issue which was already accepted. In the first attempt a show cause notice dated 27.11.2015 was issued before issuing appealable installation order based on the declaration of the Company and it was for changing the speed with prospective effect from 29.11.2015. In the present case, the show cause notice dated 27.06.2020 was issued after issuing appealable installation orders accepting the declaration of the Petitioner Company. Further, the show cause notice dated 27.06.2020 sought to change the speed not with prospective effect but rather for the period buried in past. This retrospective de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to re-decide an issue already decided earlier by the department and the appeal preferred by the department which is pending before the CESTAT, Kolkata, it is submitted that the principle of res-judicata is clearly applicable in the facts of the present case and the department could not have proceeded to issue show cause and passed impugned order on the issues which were already decided in favour of the present petitioner. In support of his contentions, he refers to the Judgment of the Apex Court rendered in Commissioner of Customs, Kandla Vs. ABM International Ltd, reported in 2015 (322) E.L.T. 818 (S.C). He has also referred to the following Judgments in support of his contentions above: (1) Jai Hind Oil Mills Co. Vs. Union of India, reported in 1994 (71) E.L.T. 902 (Bom); (2) Metal Extruders India Pvt. Ltd. Vs. Union of India, reported in 1994 (69) E.L.T. 477; (3) Para Food Products Vs. Commissioner of Central Excise, Hyderabad, reported in 2005 (184) E.L.T. 50 (Tri-Bang); 36. He further submits that for invocation of proceedings under Section 11A of the Central Excise, there must be deliberate suppression of facts which is a condition precedent for invocation of the provisions u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention on the part of the petitioner and thereby the question of imposition of any penalty does not arise and as such the impugned order 24.03.2022 in so far as the same relates levy of penalty is absolutely illegal, without jurisdiction and thereby liable to be set aside and/or quashed. 39. In view of all the submissions made, the learned Senior counsel submits that the impugned order dated 24.03.2022 issued by the Commissioner of Central Excise confirming recovery of Central Excise Duty along with interest and penalty as well as for appropriation of the amount deposited by the petitioner during the investigation against differential duty payable be contrary to the provisions of law and having been passed without taking into consideration the reply submitted by the petitioner is required to be interfered with set aside and quashed. 40. Per contra, Mr. S.C Keyal, learned Standing Counsel, Customs strongly disputes the submissions made on behalf of the petitioners. The learned counsel for the respondents submits that department has contested the matter by filing the detailed affidavit in opposition. Referring to the affidavit filed by the learned counsel for the respondents, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner on the basis of the purchased documents of the machine. It is submitted that while requesting for a technical trial run in the month of June, 2015, the assessee submitted that the manufacturer of the machine admitted major technical snag in the design of the machine which required replacement of major components of the machine as it did not syncronise itself with the internal quality checks and controls of the machine. It is submitted on behalf of the respondents that unnecessary credence and magnitude to the word Govt. Registered has been given by the petitioner to superfluously amplify the certificate issued by the Chartered engineer. It is submitted that the said Chartered Engineer was neither Central Government Registered nor a permanently approved Chartered Engineer for the Department. Further in his certificate, the said Chartered Engineer merely certified the capacity and not the maximum speed of the machine. It is submitted that there is a difference between the capacity of the machine at any given point in time depending upon the different reasons and the inherent maximum speed of a machine. It is submitted that under Rule 6 (6) of the Rules of 2008, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arted raising question about improper sealing of the pouches etc. It is a strange co-incidence that the assessee started having problems with the machine after introduction of the speed slab as a factor for determining the capacity of production and determination of speed. It is submitted that the whole exercise regarding the quality issue raised by the petitioner company was created with the sole purpose to project the decrease of the speed of the machine by way of some modification so as to avoid paying duty in the higher slab. Such reasons were not considered genuine as acceptable by the department. Any such declaration filed by the assessee/company is to be considered afresh based upon the evidences and the records available before the department and such determination has may be made by the department is independent to the earlier orders. Under such circumstances, it is submitted that there is no infirmity in the order passed by the adjudicating authority. The modification stated to have been made by the assessee in the machine are purely of temporary in nature and can be reversed at any point of time as per the design. 42. It is further submitted that since the issue in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctuous. 44. Although the facts as narrated above relate to W.P.(C) No. 3864/2022 (Dharampal Satyapal Ltd), since four number of writ petitions are being taken up for hearing and disposal together, it is necessary to refer briefly to the relevant facts in each of the writ petitions. These three Writ petition being W.P.(C) No. 5195/2022; W.P.(C) No. 5200/2022 and W.P.(C) No. 5399/2022 are preferred by the officials of the petitioner in W.P.(C) No. 3864/2022 on whom the department has passed adverse orders and imposed penalty and accordingly, these persons in their individual capacity have also assailed the said actions of the respondents in these writ petitions. 45. In so far as the W.P.(C) No. 5399/2022 is concerned, the petitioner has filed this writ petition challenging the show cause notice bearing C. No. IV (06) 58/Hqs. AE-I/2015/112 dated 27.06.2020 issued by the Principal Commissioner, GST and Central Excise Commissionerate, Guwahati directing the petitioner to show cause as to why penalty should not be imposed under Section 26 (1) of the Central Excise Rules, 2002 read with Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said reply further confirmed that the packing speed of the machine could be changed only and only by changing the CPU. 46.3 The petitioner further in response to the allegation submitted that no other parts of the machine (including Servo Motor) was changed on the date of technical modification of the machine submitted that the except for the CPU/Controller of the machine, no other parts of the machine including the Servo Motor was changed by the proforma respondent company on the date of technical modification of the machine, and further submitted that on the date of technical modification of the machine, the CPU/Controller of the machine was changed thereby downgrading the packing speed of the machine. 46.4. In response to the allegation that the petitioner has admitted that the new CPU was installed only to exhibit the speed limit of 730-750 ppm before the Assistant Commissioner on the day of non-commercial trial run on 16.06.2015, it is submitted on behalf of the petitioner that the said statement was not made by him voluntarily but under extreme pressure and duress exerted upon him by the Investigating Officer. The Petitioner submitted that by changing the CPU, the packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been committed with the consent or connivance or is attributable even to negligence on the part of the Director, Manager or other officer of the company, such officer is also deemed to be guilty of that offence. It should be noted that negligence is a tort and amounts only to a civil wrong. However, sub-section (2) states that even negligence would make a director guilty of an offence. The explanation to the section gives an artificial definition to the term company so as to include firm and other association of individuals and the word Director is to include even a partner in a firm. 46.7. It is submitted that under Section 9AA, under which persons in charge for conducting the affairs of the company are deemed to be guilty, is not a merely a procedural provision. It is a substantive piece of law and there can be no question of giving retrospective effect to it. Such an interpretation would also be hit by Article 20(1) of the Constitution as a person cannot be punished for an act which Was not an offence at the time of commission that act. 46.8. It is submitted that it is a well settled law that conjecture and surmises cannot be the basis of suspicion under Section 9AA of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Respondent company to show cause as to why Central Excise Duty to the tune of Rs. 27,61,33,589/- along with interest and penalty should not be recovered from them. The said proforma Respondent Company also replied to the show clause notice and after the reply to the said show cause notice, by the same order in original dated 24.03.2022, penalty of Rs. 27,61,33,589/- has also been imposed on the proforma Respondent Company. Against the order in Original dated 24.03.2022, the proforma respondent company filed a writ petition before this Hon ble Court which was registered and numbered as W.P.(C) No.3864/2022. 46.11. The Petitioner further submits that the petitioner has not suppressed any material facts or information. The Respondents in fact totally failed to prove the charges levelled against the Petitioner and thereby the show cause notice 27.06.2020 as well as final order in original dated 24.03.2022, so far as the imposition of penalty of Rs, 27,61,33,589/- against the petitioner is concerned, is absolutely Illegal, without jurisdiction and the game are liable to be set aside and quashed. 46.12. The petitioner submits that as per sub-section (2) of section 9 AA of the Act, a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is so exorbitant that the petitioner, who is just a salaried employee of the proforma respondent company who was not directly dealing with excisable goods, cannot even think of paying such a huge amount on account of penalty for no fault of his own and thereby the impugned show cause notice dated 27.06.2020 and the impugned order in original dated 24.03.2022 are liable to be set aside and/ or quashed. 46.15. There being no mens rea on part of the petitioner and the petitioner having lawfully performed his duties assigned to him by the company, the imposition of penalty on the petitioner is absolutely illegal, arbitrary and is liable to be interfered with. 47. In so far as the W.P. (C) No. 5200/2022 is concerned, the petitioner therein has filed this petition challenging the Demand cum show cause notice bearing C.No. IV (06) 58/ Hars.AE-I/2015/111 dated 27.06.2020 issued by the Principal Commissioner, GST and Central Excise Commissionerate, Guwahati directing the petitioner to show cause as to why penalty should not be imposed under section 26 (1) of the Central Excise Rules, 2002 read with Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand cum show Cause notice bearing C. No. IV (06) 58/ Hars.AE-I/2015/113 dated 27.06.2020 issued by the Principal Commissioner, GST and central Excise Commissionerate, Guwahati directing the petitioner to show cause as to why penalty should not be imposed under section 26 (1) of the Central Excise Rules, 2002 read with Rule 18 of the Pan Masala Packing Machines (Capacity determination and Collection of Duty) Rules, 2008 as well the order in original No. 05/Pr.Commr./CE/GHY/2021-22 dated 24.03.2022 passed by the Principal Commissioner, GST and Central Excise Commissionerate, Guwahati imposing a penalty of Rs, 27,61,33,589/- on the petitioner in terms of Rule 26 (1) of Central Excise Rules, 2002 read with Rule 17 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. In the present case penalty has been imposed by dated 24.03.2022 passed by the Principal Commissioner, GST and Central Excise, the Respondent No. 2 imposing a penalty of Rs. 27,61,33,589/- in the purported exercise of powers under Section 26 (1) of the Central Excise Rules, 2002 read with Rule 17 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcisable goods falling under tariff item 21069020 of the First Schedule to the Tariff Act. 54. Rule 4 of the Rules provide that the factor relevant to the production of notified goods shall be the number of packing machines in the factory of the manufacturer. 55. Rule 5 elaborately provides the quantity deemed to be produced. Under Rule 5, number of pouches deemed to be manufactured per operating packing machine per month, along with the retail price per pouch is described in a table in a tabular form. 56. Under Rule 6(1), the manufacture of notified goods shall immediately on coming into force of these rules, and, in any case, not later than ten days, declare, in Form 1 as under: (i) the number of single track packing machines available in his factory; (ii) the number of packing machine out of (i), which are installed in his factory; (iii) the number of packing machines out of (ii), which he intends to operate in his factory for production of notified goods; (iv) the number of multiple track or multiple line packing machine, which besides packing the notified goods in pouches, perform additional processes involving moulding and giving a definite shape to such pouches with a view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price, etc., he shall file a fresh declaration to this effect at least fifteen days in advance to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, who shall approve such fresh declaration and re-determine the annual capacity of production following the procedure specified in sub-rule (2). 59. Rule 6 (7), the duty payable is to be calculated by application of the appropriate rate of duty specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 42/2008-CE dated the 1st of July, 2008 to the number of operating packing machines in the factory during the month. 60. On an application dated 23.11.2015, along with a declaration in Form-1 in terms of Rule 6 of the Rules of 2008 filed by the petitioner requesting for deputing Central Excise officer for de-sealing of the machine on 29.11.2015 at 00:05 hours, the Assistant Commissioner of Central Excise vide order number 53 dated 27.11.2015 upon scrutinizing the materials before it came to a finding that the maximum packing speed of the machine at which it can be operated for packing of specified goods of 18 to 22 grams is 1048 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also held that the finding of the Assistant Commissioner that the appellant came up with the quality issue only pursuant to the amendment of the Rules of 2008 vide notification No. 5/2015-CE (NT) dated 01.03.2015, whereby maximum speed of the machine at which it can be operated was also made a criteria for determining the deemed production by a machine and the consequent duty liability in terms of the said notification. Such finding of the Assistant Commissioner was held to have been based purely on assumption/presumption. The appellate authority also held that this finding is not tenable as even pursuant to the amendment of the Rule in the month of March 2015, the appellant had declared the maximum packing speed of the machine as above 751 pouches per minute on the 13.05.2015. The first appellate authority also held that there are no records/evidences of clandestine removal of finished products by the appellant during the period from June 2015 to October 2015 to show any mala fide intention on their part. It was held that the reasoning given by the department was not supported by facts and accordingly, the order of the adjudicating authority dated 27.11.2015 was held not legall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner was also directed to be adjusted against the excise duty payable in future. 64. Against the order dated 22.06.2017, an intra Court appeal was preferred. During the course of the hearing in the intra-Court appeal on a statement made by the counsel representing the appellants (the present respondents herein) that the head of the technical department of the petitioner company had admitted that certain misinformation were supplied to the technical department regarding procurement of the CPU and the consequential decision to change the CPU which was undertaken by a team under consultation of the business head of the company, one Mr. Chander Kant Sarma. This statement was purportedly stated to have been made by one Mr. Chiranjib Roy Choudhury who was the Senior Vice President and the head of the technical department. The appellate Court in order to verify the submissions of the respondent counsel directed for production of statements of the said Sri Chiranjib Roy Choudhury, Senior Vice President. In pursuance to the order passed by the appellate Court, the statement stated to have been made by the said official of the company was placed on record by way of an affidavit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (adverse, if any) of the enquiry report on the ground that Mr. Chander Kant Sarma was not given an opportunity in the enquiry. The order dated 22.06.2017 passed by the Co-ordinate Bench stood modified to the above extent. 66. Pursuant to the Judgment of the appellate Court, a show cause notice dated 27.06.2020 was issued by the department asking the petitioner as to why an amount of Rs. 27,61,33,589/- (Rupees Twenty Seven Crore Sixty One Lakh Thirty Three Thousand Five Hundred and Eighty Nine only) should not be demanded and recovered from the petitioner under Section 11A (4) of the Central Excise Act, 1944 read with Rule 18 of the Rules of 2008. The petitioner was further asked to show course as to why interest at the appropriate rate under Section 11AA of the Act of 1944 read with proviso to Rule 9 of the Rules of 2008, and penalty under Rule 17 of the Rules of 2008 read with Section 11AC of the Act of 1944 should not be imposed together with the amount of Rs. 2,00,00,000/- voluntarily deposited by the petitioner should not be appropriated against a differential duty payable. 67. The petitioner responded by filing its reply dated 30.10.2020. The Principal Commissioner, by order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner and other relevant materials. 70. While there is no quarrel with the proposition that a writ Court will not invoke its extra-ordinary jurisdiction where there are statutory prescribed remedies available. But alternative remedy is not an absolute bar. There are exceptions to this Rule which permits a writ Court to invoke it s jurisdiction where the case falls under any of the exceptions. 71. To decide this issue it is necessary to refer first to the order passed by the first appellate authority/ Commissioner of Appeals. The appellate authority order was passed on an appeal preferred by the petitioner against the order dated 27.11.2015 passed by the adjudicating authority, namely the Assistant Commissioner Central Excise Division-II, Guwahati rejecting their application dated 23.11.2015 for de-sealing the machine on 29.11.2015 at 00:05 hours. By the order dated 27.11.2015, the adjudicating authority held that the maximum packing speed of the concerned machine was 751 pouches per minute and above. 72. A perusal of the order passed by the first Appellate authority reveals that while deciding the issue, the first appellate authority took into account the materials availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-rule 2 of Rule 6 of the Rules of 2008 and pass necessary orders. 73. As discussed, the order dated 27.11.2015 passed by the adjudicating authority was therefore held to be legally not sustainable and consequently rejected. And the order passed by the first appellate authority dated 30.08.2016 was appealed against by the respondents and the appeal being Appeal No. E/7689/2016-EX (DB) is presently pending before CESTAT, Kolkata. 74. A careful perusal of the order of the first appellate authority reveals that the core issue before the appellate authority was the capacity of production of the concerned machine. The appellate authority, on the basis of the materials available for the authority, concluded that the capacity of the machine was 301-750 pouches per minute and which was a finding recorded by the adjudicating authority for the earlier periods. The subsequent order passed by the adjudicating authority vide order dated 27.11.2015, whereby the capacity of the machine was found to be above 751 pouches minute was held to be not based on correct information/evidence. The appellate authority also held that no enquiry as permissible under Rule 6 of the Rules of 2008 was underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority as well as the appellate authorities are quasi-judicial functions. Accordingly, the first appellate authority is a quasi-judicial authority higher up in the hierarchy prescribed under the statute over the adjudicating authority. The findings of fact arrived at by the first appellate authority as seen from the order dated 30.08.2016 has not yet been interfered with by a still higher authority, namely the second appellate authority as prescribed in the statute, namely the CESTAT, Kolkata before which the appeal being appeal No. E/7689/2016-EX (DB) preferred by the respondent authority is presently stated to be pending. Therefore, the findings arrived by the first appellate authority are binding on the adjudicating authority and the adjudicating authority is duty bound in law to maintain the judicial discipline and accept the findings of the first appellate authority unless the same are interfered with by a still higher authority and/or an appropriate judicial forum. Such is not the position as on date and which is not in dispute. 77. In Abdul Kuddus Vs. Union of India, reported in (2019) 6 SCC 604 , the Apex Court while examining the orders passed by collateral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the conclusions which have already been arrived at by the quasi judicial Departmental authority, namely the Commissioner (Appeals) in its order dated 30.08.2016. 79. This view of this Court finds support from the law laid down by the Apex Court in Union of India Ors Vs. Kamalakshi Finance Corporation Ltd, reported in 1992 Supp (1) SCC 443, wherein the Apex Court held that in disposing of quasi judicial issues, the Revenue officers are bound by the decisions of the appellate authorities. The principles of judicial discipline require that the orders of higher appellate authorities should be followed unreservedly by the subordinate authorities. Any action permitted to be carried on by the departmental authorities contrary to such judicial discipline, will amount to break in judicial discipline contrary to the law laid down by the Courts of India, including the Apex Court as well as the statute itself. 80. The impugned order upon being carefully perused does not reflect that the materials placed by the petitioner by way of its reply was taken into consideration as there is no reference found to have been made in the impugned order. While the respondents dispute such contention raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003) 2 SCC 107] Recently, in Radha Krishan Industries v. State of H.P. [Radha Krishan Industries v. State of H.P., (2021) 6 SCC 771] a two-Judge Bench of this Court of which one of us was a part of (D.Y. Chandrachud, J.) has summarised the principles governing the exercise of writ jurisdiction by the High Court in the presence of an alternative remedy. The Court has observed : (Radha Krishan Industries case [ Radha Krishan Industries v. State of H.P., (2021) 6 SCC 771] , SCC p. 795, para 27) 27. The principles of law which emerge are that: 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternative remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternative remedy arise where : (a) the writ petition has been filed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority. The Principal Commissioner, even if, assuming is not a subordinate authority to the Commissioner (Appeals), yet such findings of the Commissioner(Appeals) cannot be contradicted by another collateral authority like the Principal Commissioner without such findings being interfered with or set aside by a higher quasi judicial or an appropriate judicial forum. Any attempt by any such authority do so will be in total contravention of the principle of law laid down in Abdul Kuddus (Supra) and Kamalakshi Finance Corporation (Supra) 86. Under such circumstances, the impugned order dated 24.03.2022 passed by the Principal Commissioner will have to be held to be an order passed in violation of the judicial discipline required to be maintained by statutory quasi-judicial authorities. 87. In Commissioner of Customs, Kandala Vs. ABM International Ltd, reported in 2015 (322) ELT 818 (SC) on the question of principle of res judicata, the Apex Court held that it is not in dispute that the first round of litigation, the matter had come up to this Court and was decided in favour of the respondent assessee. While dismissing the appeal of the Revenue, considering the facts of this case, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the duty required to be paid by the assessee was not paid or short paid or short levied or not levied because of reasons of fraud, collusion, mis-statement, suppression of fact or contravention of any provisions of the act of the Rules which can be attributed to have been resorted to by the assessee. It is only under such circumstances that the power under Section 11A of the Central Excise Act can be enforced by the competent authority. 90. In Pushpam Pharmaceuticals Co. Vs. CCE Mumbai, reported in 1995 (78) ELT 401 (SC), the Apex Court in the context of Section 11A regarding reopening of proceedings held that Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence. 92. In M/S Anand Nishikawa Co. Ltd. Vs. CCE, Meerut, reported in 2005 (188) ELT 149 (SC) on the issue of suppression of facts , the Apex Court held that relying on the observations of this Court in the case of Pushpam Pharmaceutical Co. Vs. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], the Apex Court finds that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22.06.2017 passed in W.P.(C) No. 6065/2016. Although in the intra-Court appeal filed by the department, the appellate Court by order dated 11.05.2018 passed in W.A. No. 242/2017 permitted the department to complete the enquiry. However, the findings of the Co-ordinate Bench were not interfered with. In view of such clear findings of fact by the Commissioner (Appeals) and which order is presently pending disposal before the CESTAT in an appeal filed by the department itself being No. E/7689/2016-EX (DB), this Court must come to the conclusion that there was no willful or deliberate suppression or mis-statement offered by the petitioner resulting in short levy or short paid Central Excise Duty. If that be so the very foundation on the basis of which the show cause notice and the enquiry proceeded against the petitioner under Section 11A of the Central Excise Act ceases to exist. Such action by the department will amount to invocation and/or usurpation of jurisdiction when the circumstances clearly indicate that the departmental authorities ought not to have invoked its jurisdiction under Section 11A of the Central Excise Act. 94. In view of the discussions above, this Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. The relevant paragraphs of the Judgment is extracted below: Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on @ consideration of all the relevant circumstances. Even if a Minimum penalty is prescribed, the authority competent to Impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
