ORDER
G.R. Sharma, Member (T)
1. The Commissioner of Central Excise by the impugned order confirmed the demand of Rs. 28,87,812/-under Section 11A of the Central Excise Act, 1944 by invoking the extended period of 5 years. He also confirmed the amount of Rs. 13,595/- under Section 11A of the Central Excise, 1944. He also imposed upon M/s. Lauls Ltd. the penalty of Rs, 29,01,407/- under Rule 173Q(1) read with the provisions of Section 11AC of Central Excise Act, 1944.
2. The facts of the case in brief are that the appellants are manufacturer of Ingots and articles of Iron and Steel. The appellants manufactured specific goods for supply to the Indian Railways. The Department got information that the appellant was raising escalation bills in which excise duty on the goods supplied was being collected but such duty collected was not being deposited in the Government account. The officers visited the factory on 20-1-97. The physical verification of the stock of goods was undertaken in the factory premises. 3,611 pieces of E.R. Clips, weighing 3.395 mt. valued at Rs. 90,636/- involving Central Excise Duty of Rs. 13,595/- were found short as against the recorded balance,
3. Scrutiny of the documents revealed that the appellant was supplying goods to the Railways under a contract in which there was an escalation clause. The appellant had paid Central Excise Duty on the basis of value declared in the price list at the time of clearance of the goods. For the escalation amount the appellant raised bills separately. Statement of Shri C.S. Gupta, Director of the appellant-company was recorded who stated that he did not have any ready knowledge about any escalation of prices for supplies to Railways and realisation of such clues on account of such escalation. Documents were obtained from the Financial Adviser, Chief Accounts Officer and PVC escalation accounts from Kashmere Gate. Shri C.S. Gupta in his further statements stated that bills in respect of price variation clause (PVC) were got paid on the contracts. It was noticed that the appellant had raised bills covering the amounts both for supplies as well as escalation charges. The normal bills as well as the escalation bills raised were inclusive of excise duty and the appellant received payments accordingly. Shri C.S. Gupta in his statement dt. 13-3-97 admitted the raising of bills on account of escalation charges containing excise duty and receipts of payments accordingly. Scrutiny of the price lists revealed that the appellant filed price list for each contracts separately, the contract contained a price variation clause. The appellant received payment initially on the basis of G.P.I/invoices. Subsequently, the appellant raised bills on account of price variation clause, the appellant was required to intimate to the Department the raising of bills on account of price variation clause but the appellant did not do. Scrutiny of the documents further shows that the appellant had collected a sum of Rs. 28,87,812/- as Central Excise Duty. Accordingly, a SCN was issued to the appellants asking them to explain as to why a sum of Rs. 28,87,812/- collected as excise duty from the Railways and voluntarily debited by them should not be confirmed under Section 11A, why an amount of Rs. 13,595/- debited in R.G. 23A Part II should not be confirmed and why a penalty should not be imposed on them. In reply to the SCN, the appellant submitted that they had already paid voluntarily the amount of duty of Rs. 28,87,812/- and have no objection if this amount is confirmed. They also raised no objection to confirmation of the amount of Rs. 13,595/-which they had voluntarily paid. They also submitted that Section 11AC was not applicable in their case because the duty demand pertains to the period 19-10-92 to 27-5-96 whereas Section 11AC was incorporated in the statutes on 27-9-96. In support of this contention they cited and relied upon the decision of the Hon’ble Supreme Court in the case of UOI v. Madan Gopal, AIR 1954 SC 158 and in the case of Collector of Central Excise v. Ashoka Mills Ltd. reported in 1989 (43) E.L.T. 797 (S.C.) = AIR 1989 S.C. 33. After careful consideration of the submissions made the ld. Commissioner held as indicated in the preceeding paragraph.
4. Shri L.P. Asthana, ld. Counsel, appearing for the appellant submits that the appeal is only against imposition of penalty of Rs. 29,01,407/-. Ld. Counsel submitted that Section 11AC of the Central Excise Act, 44 was not applicable to the facts of their case inasmuch as the period of demand was from 19-10-92 to 27-5-96 whereas Section 11 AC was for the first time Introduced on 27-9-96. He submitted that the Tribunal have been consistantly holding that Section 11AC cannot be applied retrospectively. It will be applicable only prospectively. He submitted that the ld. Commissioner in his order has no doubt mentioned that penalty is imposed under the provisions of Rule 173Q(1) read with the provision of Section 11 AC of Central Excise Act. He submitted that the amount of penalty will clarify that this amount is exactly equal to the amount of duty confirmed in the order. He submitted that thus this amount is actually the amount of penalty imposed under Section 11AC. He submitted that there is no separate amount indicated under Rule 173Q(1) though this rule has been invoked. He submitted that in the absence of apportionment of the amount, the amount of penalty is actually under Section 11 AC. He submitted that the ld. Commissioner in his order has correctly observed that Section 11D does not provide for imposition of any penalty. In spite of this finding, ld. Counsel submitted that the ld. Commissioner has imposed the penalty erroneously. Ld. Counsel also submitted that even the confirmation of demand under Section 11D was not legal as no machinery for adjudicating the amount collected as Central Excise Duty has been provided under Section 11D. In support of his contention he cited and replied upon the decision of the Hon’ble Madras High Court in the case of Eternit Everest Ltd. v. UOI reported in 1997 (89) E.L.T. 28. Ld. Counsel therefore, prayed that the appeal may be allowed.
5. Countering the arguments of the Counsel for the appellant Shri Sa-tanam Singh, ld. DR submitted that no doubt a consolidated penalty which incidentally happened to be equal to the amount of duty is confirmed. However in case it is held that penalty is not liable to be confirmed under Section 11AC, having regard to the consistant view of the Tribunal, then penalty should be deemed to be imposed under Section 173Q(1). He submitted that under Section 173Q(1), the quantum of penalty can be three times of the value of the goods. He submitted that this quantum in the present case is not more than three times of the value of the goods and therefore, can be presumed to be the penalty under Rule 173Q(1). He submitted that in this view of the matter, penalty may be confirmed.
6. We have heard the rival submissions. We have perused the case law cited and we have examined the findings vis-a-vis the relevant Section of the Act. We find that a consolidated penalty said to be under Rule 173Q(1) read with Section 11AC has been imposed. What part of it is imposed under Section 11AC and what amount in under Rule 173Q(1) is not clear from the order. Apportionment cannot be done in appeal. We also note that quantum of penalty is equal to the total amount of duty confirmed against the appellant. We also note that the period of demand in the instant case is before the date of introduction of Section 11AC in the statutes. The Tribunal has been consistently holding that only such demand as accrued after the introduction of Section 11AC shall be coveted by the penal provisions of Section 11 AC. In the instant case the demand is for an earlier period and therefore, the penal provisions under Section 11 AC cannot be applied to the facts of the present case. Moreover, we “find that in the instant case, the demand has been raised under Section 11D, the Hon’ble Madras High Court has clearly held that in the absence of the machinery provision under Section 11D, the demands cannot be enforced nor can penalties be sustained in law. Looking to the above facts of the case, we find substance in the appeal. In this view of the matter, the appeal is allowed with consequential relief, if any, admissible under law.