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TAXAP/564/2009 13/ 15 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 564 of 2009
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 & CUSTOMS - DAMAN - Appellant(s)
Versus
R
A SHAIKH PAPER MILLS PVT LTD - Opponent(s)
=========================================================
Appearance
:
MR
RJ OZA for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 17/02/2010
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;
Whether
in the facts and circumstances of the case, the Tribunal has
committed a substantial error of law in reducing the mandatory
penalty imposed on the respondent assessee under Section 11AC of
the Central Excise Act, 1944 to the extent of 25% despite having
confirmed the duty on account of clandestine removal and evasion of
Central Excise duty?
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 in the facts and circumstances of the case, the Tribunal
is justified and has committed substantial error of law in placing
reliance on the decision rendered by the Hon’ble High Court in the
case of CCE v. Malbro Appliances P. Ltd., reported in 2007 (79) RLT
109 (Del) / 2007 (208) ELT 503 (Delhi) and in case of K.P.Pouches
P. Ltd., reported in 2008 (85) RLT (483) (Delhi)/ 2008(228) ELT 31
(Del)?
(e)
Whether the impugned order made by the Tribunal can be said to be
an order in accordance with law?
(f)
Whether or not in the facts and circumstances of the case the
Tribunal has committed substantial error of law in reducing penalty
to 25% of the duty amount on 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 17.8.2001 and detected evasion
of Central Excise duty payable by the respondent as on the date of
the said search. The show cause notice was issued on 28.3.2003. The
adjudicating authority has passed order dated 30.4.2004 demanding
central excise duty amounting to Rs.16,49,237/- and cess Rs.17,237/-
under Section 11(A)(2) of the Central Excise Act, 1944 and also
ordered to recover interest at the appropriate rate on the total
duty determined as stipulated under Section 11AB of the Central
Excise Act, 1944 and also imposed penalty of Rs.16,49,237/- on the
respondent under Section 11AC of the Central Excise Act, 1944. The
respondent paid duty amounting to Rs.6,31,702/- and cess Rs.4,935/-
on 17.8.2000 and 13.8.2000. The respondent preferred Appeal and the
Appellate Commissioner by his order dated 19.10.2004 rejected the
Appeal of the respondent. Therefore, the respondent preferred Appeal
before the Tribunal and the Tribunal has confirmed order of the
adjudicating authority and Appellate Commissioner with regard to
levy of duty and interest, however, passed order reducing levy of
penalty at 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 of hand it appears from the submissions of Mr.Oza that
the entire amount has not been paid by the respondent assessee
and interest and/or reduced penalty of 25% were also not paid by the
respondent-assessee. It is also apparent from the record that the
adjudicating authority has not given any option to the
respondent-assessee, we therefore direct the adjudicating authority
to send a communication to respondent-assessee indicating therein
that a particular amount of duty demanded alongwith 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
reduced penalty of 25% such amount of duty not paid so far alongwith
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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