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TAXAP/1855/2008 1/ 15 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1855 of 2008
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
COMMISSIONER
OF CENTRAL EXCISE - Appellant(s)
Versus
SANGAM
PRINTS PVT LTD - Opponent(s)
=========================================================
Appearance
:
MR
RJ OZA for
Appellant(s) : 1,
MR PARESH M DAVE for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 18/02/2010
ORAL JUDGMENT
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
Leave to amend as per the
draft amendment.
The Commissioner of
Central Excise & Customs, Surat-I has filed this tax Appeal
under Section 35G of the Central Excise Act, 1944 proposing to
formulate the following substantial questions of law for
determination and consideration of this Court;
(a)
Whether in the facts and circumstances of the case, the Tribunal
has committed substantial error of law in confirming decision of
the Commissioner (Appeals) setting aside demand of interest under
Section 11AB and imposition of penalty under Section 11AC without
assigning any reason for the same ?
(b)
Whether in the facts and circumstances of the case the Tribunal has
committed substantial error of law by not allowing appeal of the
Department and imposing full penalty under Section 11AC of the Act
on the respondent ?
(c)
Whether in the facts and circumstances of the case the Tribunal
has committed substantial error of law in
applying decision of the Delhi High Court in case of M/s.Marlbro
Appliances P. Ltd and in the case of M/s. K.P.Pouches ?
Heard Mr. R. J. Oza,
learned Standing Counsel appearing for the Revenue and perused the
order passed by the authorities below.
At the time of hearing of
this Tax Appeal Mr.Oza reframed the substantial questions of law
which are as under :-
(a)
Whether or not benefit of reduced penalty under proviso to Section
11 AC of the Central Excise Act, 1944 can be extended to such
person who has not paid amount of interest determined by the
adjudicating authority payable under Section 11AB of the Central
Excise Act, 1944 ?
(b)
Whether or not benefit of reduced penalty under proviso to Section
11AC of the Central Excise act, 1944 can be extended to such person
who has paid, before issuance of show cause notice only duty
determined by the adjudicating authority payable under Section
11A(2) of the Central Excise Act, 1944?
(c)
Whether the adjudicating authority is statutorily obliged to set
out in his order the availability of benefit of reduced penalty
prescribed under proviso to Section 11AC of the Central Excise Act,
1944 and to give option to such person liable for penalty under
Section 11AC of the Central Excise Act, 1944 ?
(d)
Whether the impugned order made by the Tribunal can be said to be
an order in accordance with law?
(e)
Whether or not in the facts and circumstances of the case the
Tribunal has committed substantial error of law in confirming
decision of Appellate Commissioner extending benefit of reduced
penalty to the extent around 25% of duty amount to the respondent
?
Mr.Oza submitted that the
Tribunal has not recorded any reasons setting out facts of the case
of the respondent and has mechanically passed order extending
benefit of reduced penalty on the respondent. He has further
submitted that the team of Central Excise Officers had carried
search of the respondent’s premise on 9.1.2003 and detected evasion
of Central Excise duty payable by the respondent as on the date of
the said search. The respondent having faced with the situation
deposited the entire duty demanded prior to issuance of show cause
notice. The show cause notice was issued on 2.7.2003. The
adjudicating authority has passed order dated 27.2.2004 demanding
duty of Rs.59,218/- and also demanded interest at the appropriate
rate from the respondent under Section-11Ab of the Act and also
imposed penalty of Rs.59,218/- under Section-11AC of the Central
Excise Act, 1944. The respondent preferred Appeal and the Appellate
Commissioner by his order dated 10.1.2005 confirmed order of duty
demand made by the adjudicating authority, set aside demand of
interest under Section-11AB and penalty under Section-11AC of the
Act. The Department preferred Appeal against the order of the
Appellate Commissioner. The Tribunal by order dated 16.5.2008
confirmed the penalty amount to 25% of the duty amount.
Mr.Oza has submitted that
the respondent has not complied with the preconditions for availment
of benefit of reduced penalty under proviso to Section 11AC of the
Central Excise Act, 1944 and, therefore, the impugned order of the
Tribunal is liable to be set aside.
Mr.Oza further submitted
that the decision of the Delhi High Court in the case of K. P.
Pouches (P) Ltd., reported in 2008 (228) ELT 31 (Del),
cannot be applied to the case of the respondent inasmuch as in the
case of K.P. Pouches (P) Ltd., (Supra)
the adjudicating authority has not ordered recovery of interest
under Section 11AB of the Central Excise Act, 1944 because in the
said case the assessee had deposited total amount of duty payable
under Section 11A(2) of the Act on the date of detection of evasion
of duty itself. He has further submitted that the decision in the
case of Malbro Appliances P. Ltd., reported in
2007 (208) ELT 503 (Del),
also cannot be applied because the facts of the case on hand are not
identical to the facts of the case of the assessee in the Malbro
Appliances P. Ltd., (Supra).
On the contrary, in view of settled proposition laid down by the
Punjab and Haryana Court in the case of Machino
Montell (I) Ltd., reported in 2006(4) STR 177 (P & H)
as well as judgments of the Apex Court in the case of Rajasthan
Spinning & Weaving Mills, reported in 2009(238) ELT 3 (SC),
Dharmendra Textile Processors, reported in 2008 (231) ELT 3 (SC),
and
decisions of the Tribunal in the case of Jawala
Steels Pvt. Ltd., reported in 2009 (238) ELT 694 (Tri Kolkata),
and Ponneri Steel Industries, reported in 2009
(238) ELT 295 (Tri Chennai)
and such other cases, the Tribunal was required to allow department
to levy penalty on the respondent for the amount equivalent to his
duty liability and pass order accordingly.
Mr.Oza
has further submitted that the impugned order of the Tribunal is in
disregard of the law laid down by this Court in Tax Appeal No.140 of
2008 and Special Civil Application No.22931 of 2005 and such other
judgments, which obligate upon the Tribunal to record cogent reasons
in support of conclusion arrived at by him in passing the final
order. In support of this submission Mr.Oza also relied on the
following decisions (I) Coats Viyella India
Ltd., Vs. Commissioner of Central Excise, 2004 (133) ELT 229 (SC)
(ii) TATA Engineering & Locomotive Co. Ltd., Vs. Collector of
Central Excise, 2006 (203) ELT 360 (SC) (iii) Commissioner of
Central Excise Vs. Wimco Ltd., 2007 (217) ELT 3 (SC) (iv)
Commissioner of Central Exicse Vs. GTC Industries Ltd., 2008 (228)
505 (SC) (v) Commissioner of Central Excise Vs. Srikumar Agencies
2008 (232) 577 (SC) (vi) Stead Fast Paper Mills Vs.
Collector of Central Excise, 1983 (12) ELT 744 (Guj.).
We
have considered the submissions made by Mr.Oza and also perused very
minutely the order passed by the authorities below. As a matter of
fact, all these questions reframed by Mr.Oza are different facets of
the main question as to whether the Tribunal is justified in
reducing the penalty to 25% of the duty leviable on the respondent.
All these aspects of the main question are already considered by
this Court in its order dated 18.11.2009 in the case of Messers
Exotic Associates Vs. Commissioner of Central Excise (Tax Appeal
No.572 of 2007 with Tax Appeal No.869 of 2007 and Tax Appeal No.1942
of 2008, in the case of Commissioner of Central Exicse & Customs
Vs. Rama Synsilk Mills P. Ltd., decided on 21.1.2010.
This Court after considering the decision of Commissioner
of Central Excise Vs. Malbro Appliances, 2007 (79)
RLT 109 (Delhi), Union of India Vs. Dharmendra
Textiles, 2008 (231) ELT 3 (SC), Union of India Vs. Rajasthan
Spinning & Weaving Mills, 2009 (238) ELT 3 (SC), K. P. Pouches
(P) Ltd., Vs. Union of India, 2008 (228) ELT 31 (Delhi),
Commissioner of Central Excise, Rohtak Vs. J. R. Fabrics Pvt. Ltd.,
2009 (238) ELT 209,
has taken the view that the order passed by the Tribunal retaining
the penalty of 25% of the duty amount seems to be quite justified.
For the reasons recorded in the said two judgments, we do not feel
it necessary to take any different view in this Appeal.
However,
Mr.Oza has made two more submissions in this Tax Appeal. He has
emphatically stated that the respondent has not complied with
pre-condition for availment of benefit of reduced penalty under
proviso to Section 11AC of the Central Excise Act, 1944. As per the
first proviso, the duty amount
was not paid with interest and even the reduced penalty of 25% is
not deposited by the respondent within 30 days from the date of such
determination, as required under second proviso to Section 11AC of
the Act. So far as second issue is concerned, Mr.Oza submitted that
the adjudicating authority is not under any statutory obligation to
set out in its order the availability of benefit of reduced penalty
prescribed under proviso to Section 11AC of the Central Excise Act
and to give an option to such person liable for penalty under that
Section. Both these issues were dealt with by this Court in Tax
Appeal No.572 of 2007 with tax Appeal No.869 of 2007 decided on
18.11.2009. It is also important to note that the adjudicating
authority has not calculated the interest neither in the
order-in-original nor even thereafter. It is, therefore, too much to
expect from the respondent assessee to pay the interest alongwith
the duty amount in absence of such calculation
of interest. As far as statutory obligation of the adjudicating
authority is concerned, the Central Excise Department itself has
issued Circular on 22.5.2008 wherein it is clarified that in all
cases wherein penalty under Section 11AC of the Act is imposed the
provisions contained in the first and second proviso of Section 11AC
should be mandatorily mentioned in the order-in-original itself by
the adjudicating authority. It is, therefore, not open for the
revenue to agitate this issue before the Court in contradiction of
the Circular issued by the Central Excise Department. This Court in
Messers Exotic Associates (Supra)
has
directed the adjudicating authority to pass a fresh order giving
option to the assessee to pay the duty amount within 30 days by
making it explicitly clear in the order itself that if the assessee
wants to avail such option he is permitted to do so. In the case
on hand since the duty amount has already been paid
by the respondent assessee and if the interest and/or reduced
penalty of 25% were not paid by the respondent assessee, the
adjudicating authority may send a communication to the respondent
assessee indicating therein that the particular amount of interest
and/or 25% of the penalty of the duty amount is not paid by the
respondent assessee and hence if the assessee wants to avail the
benefit of the reduced penalty of 25%, such amount of interest
and/or penalty of 25% should be paid within 30 days from the date of
receipt of such communication, failing which they would be liable to
pay penalty under Section 11AC equivalent to the amount of duty.
Before
parting, we observe that the order passed by the Tribunal cannot be
said to be a non-speaking and non-reasoned order. The authorities
cited by Mr.Oza in support of his submission that a non-speaking
order is passed
by the Tribunal and hence it deserves to be dismissed, were duly
considered by us and we are of the view that they are not applicable
to the facts of the present case. The Tribunal while dismissing the
Departmental Appeal observed that the quantum of the penalty is to
the extent at around 25% of the duty amount and does not call for
any interference. The Tribunal is taking consistent view in the
matters of penalty levied under Section 11AC and when the duty
amount is paid before issuance of show cause notice, the penalty is
reduced to 25% of the duty amount. If the duty amount with interest
is not paid in time and even reduced penalty of 25% of the duty
amount is not paid in time and option is not given to the respondent
assessee, we have taken the view that such option should be given to
the assessee and period of 30 days would commence from the date of
giving such option. In this view of the matter, no interference is
called for in the
order of the Tribunal.
Subject to the above
clarification this Tax Appeal stands dismissed.
( K. A. PUJ, J.)
(RAJESH H. SHUKLA, J.)
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