ORDER
Jeet Ram Kait, Member (T)
1. These ten appeals have been filed by the Revenue against the Order-in-Appeal No. 165 to 174/98 (CBE), dated 12-11-98 passed by the Commissioner (Appeals), Trichy against the reduction of mandatory penalty under Section 11AC of the C.E. Act, 1944 to Rs. 75,000/- in the case of M/s. Kannu Pipes and to Rs. 2 lakhs in the case of M/s. Sree Vishnu Pipes.
2. Shri C. Mani, learned DR has perused the photo copy of the TR-6 challans and also Form 2B and Form 3 issued by the designated authority under KVS Scheme, 1998 in full settlement of the dues. He also submitted that the department has filed all these appeals against the order of the Commissioner (Appeals) reducing the statutory penalty under Section 11AC of the CE. Act, 1944.
3. None appeared for the respondents. Further they have sent various letters as well as photo copies of the Form 2B and Form 3 and TR-6 challans by which it appears that the assessees have settled the matter under the KVS Scheme.
4. I have considered the submissions made by the learned DR and gone through the records. I observe that penalty cannot be imposed under Section 11AC of the C.E. Act, 1944 retrospectively since this Section was inserted with effect from 28-9-96 and therefore, penalty under this Section could have been imposed only after 28-9-96. Further, the department has still benefited by reducing the penalty since the Commissioner (Appeals) could have restricted the imposition of penalty from 1-10-1996. The Commissioner (Appeals) has cited a number of judgments in his order regarding imposition of penalty under Section 11AC. The Hon’ble Apex Court in the case of Brij Mohan v. C.I.T. reported in 120 ITR 1 has held that penalty under Section 11AC cannot be imposed retrospectively. The appeals filed by the Revenue against various employees of M/s. Kannu Pipes and Shri Vishnu Pipes are
infructuous and are not maintainable inasmuch as penalty under Section 11AC cannot be imposed against the employees since statutory penalty under this Section can be imposed only against the Company i.e. M/s. Kannu Pipes and M/s. Sree Vishnu Pipes. Even on that account also the appeals of the Department against the Proprietor/Managers fail on this ground itself. Commissioner (Appeals) had also confirmed penalty on proprietors/Manager under Rule 209A of the C.E. Rules, 1944. The appeals are not sustainable in view of the fact that the provisions of Section 11AC comes into effect only with effect from 28-9-96. Otherwise also the Commissioner (Appeals) has imposed considerable amount of penalty under Section 11AC and his order is therefore, required to be sustained. The appeals are accordingly rejected.