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TMI Blog2001 (10) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ons revealed that the appellants were raising debit notes on Reliance Industries Ltd. recovering pumping charges showing them as delivery charges @ Rs. 80/- per K.L. on supply of super kerosene oil and @ Rs. 50/- per metric tonne for supply of raw naphtha (special cut naphtha). The charges were not included in the assessable value of the aforesaid products and such charges were recovered separately over and above the price of excisable goods declared to the Central Excise department. From the agreement between the parties it is revealed that the buyers have requested for the supplies of the product to be pumped at their Patalganga plant through their pipeline and the price included pumping charges and other operating costs incurred by the seller manufacturer. A show cause notice dated 31-3-1999 was issued demanding Rs. 3,25,00,182/- and which was paid on 16-12-1998 should not be appropriated towards the duty demanded and penalty equivalent to the duty as demanded should not be imposed on them. The interest at the prescribed rates was also demanded which worked out to Rs. 57,26,148/-. In Annexure A to the show cause notice, what was mentioned in the earlier portion of the order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in paragraph 7 of the Order-in-Original No. 37/2001, dated 19-2-2001. He therefore attacks the impugned order before us that imposition of penalty at the full amount, viz. Rs. 2.7 crores under Rule 173Q for the period 1-4-1994 to 27-9-1996 and Rs. 1.17 crores under Section 11AC for the subsequent period upto 30-1-1998 is bad in law. He further emphasized the fact that in view of the judgment of the Supreme Court in the case of BHEL v. State of Madhya Pradesh - 1998 (99) E.L.T. 33 that the provision for maximum penalty is merely indicative of the upper limit of penalty imposable and that it is not necessary that in all cases such penalty must be imposed by the authority. He also cited various other case laws. Learned DR adopts the reasoning. 4.We have considered the case in all its aspects. While it is true that in this case payment of duty has been made prior to issuance of show cause notice but it is a fact that Rule 173Q of the Central Excise Rules has been interpreted to mean similar to Section 11AC of the Central Excise Act. In respect of penalty the adjudicating authority has distinguished each and every order of the CEGAT and held in paragraph 20 of the order as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, "legally bound, subject to a tax or penalty, under an obligation". In Black's Law Dictionary (sixth edition), the word "liable" means, "bound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensation, or restitution ........ Obligated; accountable for or chargeable with. Condition of being bound to respond because a wrong has occurred. Condition out of which a legal liability might arise ........ Justly or legally responsible or answerable". 31. When we examine Rule 173Q it does appear to us that apart from the offending goods which are liable to confiscation the person concerned with that shall be liable to penalty upto the amount specified in the Rule. It is difficult to accept the argument of the appellant that levy of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2) person concerned is liable to penalty. We may contrast the provisions of Rule 173Q and Section 11AC with Section 271 of the Income-tax Act, 1961. This Section, prior to amendment in 1988, stood as under : "Failure to furnish returns, comply with not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inaccurate particulars of such income ......." (Emphasis supplied) At paragraph 35 the Court has held as follows :- "Penalty to be imposed has to be in commensurate with the gravity of the offence and the extent of the evasion." At paragraph 31 the Court specifically held that rule 173Q applied to them. Apart from the offending goods which were liable to confiscation the person concerned with that shall be liable to penalty and it has been specifically held that it is difficult to accept the argument of the appellant that levy of penalty is discretionary and it is only the amount of penalty which is discretionary. 6.In this case the facts would reveal that the assessee did not pay the amount and that the meeting held in the Commissioner's room in December 1998 and that at the request of the Commissioner's that the payment was made of course before the issuance of the show cause notice. We also take note of the fact that in an another proceeding, an another officer has by order dated 19-2-2001 did not impose penalty which has been pressed into before us by learned Senior Counsel for the department. In both the orders before us that the impugned order and another order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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