9911796707
TMI Blog2000 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention rendering themselves liable for penal action under Section 11AC of the Act. 2.Brief facts are that the appellants who are manufacturers of aerated waters and beverages falling under Chapter headings 21 and 22 of the Schedule to the Central Excise Act, 1985 were found to have taken credit of Rs. 30 lakhs in PLA on 31-3-1998 without submitting TR 6 challan as proof of deposit of Central Excise duty. Against the said amount of Rs. 30 lakhs, the appellants cleared excisable goods without sufficient balance in the PLA account. A show cause notice was issued to the appellants on 9-11-1998 alleging that they had made clearance of excisable goods against the amount of Rs. 30 lakhs without having sufficient balance in their PLA as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards payment of excise duty. He found that as per the provisions of Rule 11 read with 173G, appellants should have sufficient balance in their PLA at the time of clearing their goods and the goods should have been removed after actually debiting therefrom the amount of duty payable. As against this requirement the appellants had on both the occasions cleared their goods without sufficient balance in PLA and taken credits without depositing the same with the Department. He rejected the appellants' contention that there was no malafide intention on their part. The explanation that lack of sufficient balance in the PLA at the relevant time was due to delay in the clearance of the cheques and crediting of amounts in their PLA and that in any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty on the appellants under Section 11AC in the circumstances of the case and the demand of interest under Section 11AB. He submitted that the allegation of malafide intention to evade payment of duty is not supported by the facts of the case. The appellants had explained that they had on 31-3-98 received orders for delivery of a huge quantity of aerated waters from a very important customer and since it was peak season time and if they were not able to satisfy the customer their standing would be affected, the appellants had no alternative but to clear the goods despite a shortage in the PLA to cover the entire clearance. Immediate deposit of the amount in PLA could not be made due to Bank holidays. The appellants had sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no duty demand under Section 11A(1) or determination of duty liability under Section 11A(2), the question of penalty under Section 11AC does not arise. The question of payment of interest under Section 11AB does not also arise in the absence of a duty liability. According to Ld. Counsel, in the facts of the case since there was no intention on the part of the appellants to remove any excisable goods without payment of duty and since their actions were bonafide, no penalty under Rule 173Q(1)(a) was also imposable. Ld. Counsel therefore, prayed for setting aside of the impugned order. 5.Appearing for the Respondent Collector, Shri K.K. Dubey, Ld. JDR submitted that the mere fact that the appellants had subsequently deposited the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, he submitted that this fact by itself will not vitiate the SCN when it had clearly mentioned the relevant provisions, viz, Rules 9(1) and 173G(1), both of which made it mandatory that excisable goods were not to be removed until excise duty leviable thereon has been paid and unless there was sufficient balance in the PLA to meet the duty liability of the goods removed. He relied on the following decisions in support of this contention : - 1. J.K. Steel v. Union of India others [1978 (2) E.L.T. J 355 (S.C.)] 2. N.B. Sanjana, Asstt Collector of Central Excise, Bombay v. Elphinstone Spg. Wvg Mills Co. Ltd. [1978 (2) E.L.T. J 399 (S.C.)] 6.On consideration of the submissions made and on perusal of the record, we find that the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11A(2) pre-supposses the issue of a notice under sub section (1) of Section 11A for recovery of dues not levied/not paid, etc. This means that no determination of duty liability under Section 11A(2) can take place without a notice being served on the person concerned asking him why the amount specified in the notice issued under section 11A(1) shall not be paid by him. Section 11A(2) envisages consideration by the proper Central Excise Officer any representation made by the person in reply to the show cause notice issued to him under Section 11A(1). Since the last limb of Section 11AC makes the liability to pay penalty dependent on the determination of duty under Section 11A(2), it is clear that the imposition of penalty under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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