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2024 (11) TMI 609

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..... F CENTRAL EXCISE DELHI-II VERSUS GANPATI ROLLINGS PVT. LTD. ANR. [ 2016 (6) TMI 157 - DELHI HIGH COURT] that Section 11AC is a condition precedent for taking action under Rule 25. Section 11AC provides for penalty for not paying or short paying duty by reason of fraud, collusion, wilful misstatement or suppression of facts. No demand of duty was confirmed in the impugned order nor was any penalty imposed under section 11AC. Therefore, confiscation of goods and imposition of penalty under Rule 25 need to be set aside. A plain reading of Rule 26 shows that it is a consequence of the confiscation. This penalty also needs to be set aside. The impugned order is set aside qua the appellants - appeal allowed. - MR. DILIP GUPTA, PRESIDENT AND MR. .....

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..... roposing to deny the benefit of SSI exemption notification, demand duty, confiscate some seized goods and impose penalties. These proposals were initially confirmed in the Order in original dated 30.11.2012. 4. On appeal, this Tribunal held that the appellant was entitled to the SSI exemption but remanded the matter to the Commissioner regarding other issues because the appellant s contentions had not been considered by the Commissioner. 5. In his de novo order 12.05.2020 impugned in this appeal, the Commissioner dropped the demand of duty but confiscated the goods under Rule 25 of Central Excise Rules, 2002 [Rules] and imposed fine in lieu of confiscation. He also imposed penalty under Rule 26 of the Rules. 6. Learned counsel for the appel .....

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..... following the principles of natural justice. 7. Learned counsel also submits that penalty under Rule 26 is attracted for actions which rendered goods liable for confiscation under Rule 25 and imposition of penalty under Section 11AC is a condition precedent to the confiscation of goods under Rule 25. He relies on the following decisions: a) Commissioner of C. Ex., Delhi II versus Ganpati Rolling Pvt. Ltd. [ 2016 (338) ELT 587 (Del.)] b) Commissioner of Central Excise and Customs versus Saurashtra Cement Ltd. [ 2010(260) ELT 71 (Guj.)] 8. Learned counsel submits that was neither any proposal to impose any penalty under Section 11AC nor was any penalty imposed under it. Therefore, confiscation of goods and imposition of redemption fine and pe .....

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..... usly the requirements of Section 11AC will have to constitute a condition subject to which the power under Rule 25 can be exercised. Rule 25 of the CE Rules itself came up for interpretation before the Gujarat High Court in Saurashtra Cement Ltd.(supra) wherein Para 17 it was observed as under : 17. It is also to be borne in mind that Rule 25 starts with the word Subject to the provisions of Section 11AC .. . Section 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contraventi .....

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..... lty for not paying or short paying duty by reason of fraud, collusion, wilful misstatement or suppression of facts. No demand of duty was confirmed in the impugned order nor was any penalty imposed under section 11AC. Therefore, confiscation of goods and imposition of penalty under Rule 25 need to be set aside. 14. Penalty under Rule 26 is consequent upon the confiscation under Rule 25 and this Rule reads as follows: RULE 26. Penalty for certain offences. (1)Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or .....

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