Commissioner,Central Excise vs M/S Asian Plywood Industries P on 15 September, 2008

                       TAX CASE No.20 OF 2001

       (Against order No.S-371, A-411/Kol/2001 dated 21.6.2001 passed by
       Mrs.Archana Wadhwa, Member (Judicial) of the Customs, Excise and
       Gold (Control) Appellate Tribunal, Eastern Bench, Calcutta in Stay
       Petition No.602 /2000 and Appeal No.E-518 of 2000)
                                 ---------

COMMISSIONER,CENTRAL EXCISE,PATNA—————-Applicant
Versus
M/S ASIAN PLYWOOD INDUSTRIES((P) Ltd.————Respondent

———

For the Applicant : Mr.Rakesh Kumar Singh,
Central Government Standing Counsel.

For the Respondent : None.

——-

PRESENT

THE HON’BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD
THE HON’BLE DR. JUSTICE RAVI RANJAN

———-

Prasad & M/s Asian Plywood Industries (Private) Limited
Ranjan, JJ:

(hereinafter referred to as the “manufacturer”) manufactures

wood and articles of wood classifiable under Chapter 44 of the

Central Excise Tariff. The preventive Officers of the Central

Excise Headquarters, upon an intelligence report, visited the

manufacturer’s factory and conducted various checks and

verification. It was found that RG-I register was not written upto-

date and certain private records maintained by the manufacturer

reflected actual production and clearance of final products on

day-to-day basis. Physical stock taking of the finished goods was

undertaken and it was found that the stock was short than the

actual recorded balance in the RG-I register. The statements of

Supervisor of the manufacturer company, namely, Rudal Singh
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as also P.S.Yadav, Person-in-charge of the Excise work were

recorded. Informations were also sought for from the buyers of

the manufacturer and in the process the statement of one Iqbal

Ahmad, Proprietor of M/s Ply-way, Patna was recorded. On the

basis of the aforesaid fact, the manufacturer was served with a

show cause notice dated 20th of August, 1998 alleging

clandestine removal of the goods valued at Rs.8,67,700=40

without payment of duty of Rs.1,63,556=54. The notice proposed

confirmation of demand of duty with the imposition of personal

penalty and interest under the provisions of Section 11AB of the

Central Excise Act.

On consideration of the material, the Additional

Commissioner confirmed demand of duty as also personal

penalty alongwith the interest. Manufacturer’s appeal against the

order of Additional Commissioner also failed. It is relevant here to

state that the Additional Commissioner had imposed personal

penalty of Rs.1,63,556=54 which was affirmed in appeal by the

Commissioner. Manufacturer then preferred appeal before the

Custom, Excise and Gold (Control) Appellate Tribunal, Calcutta

(hereinafter referred to as the “Tribunal”). The Tribunal on

appraisal of the material affirmed the order of the Additional

Commissioner and Commissioner (Appeals) so far as the

clandestine removal of goods is concerned, but reduced the

amount of personal penalty to Rs.75,000=00. While doing so, the

Tribunal had observed as follows:

“However, in the facts and circumstances of
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the case of the quantum of personal penalty
imposed upon the appellants, is reduced from
Rs.1,63,556.54 to Rs.75,000.00 (Rupees
seventy-five thousand) only. But for the above
modification in the quantum of penalty, the
appeal is otherwise rejected. Stay petition also
stands disposed of.”

Aggrieved by the same, the Commissioner of Central

Excise has preferred this application under Section 35-H of the

Central Excise Act, 1944. This Court by order dated 12.1.2004, in

exercise of the power under Section 35H(4) of the Act, directed

the Tribunal to draw the statement of facts and refer the following

question of law for determination :

“Whether the Tribunal after having dismissed
the appeal on merit after coming to the
finding that the demand was validly made by
the Department was justified in interfering
with the quantum of personal penalty and
reducing the same contrary to the provisions
contained under section 11AC of the Central
Excise Act without assigning any reason
much less valid reason ?

Mr.Rakesh Kumar Singh, Central Government

Counsel, appearing on behalf of the applicant submits that even if

it is assumed that the Tribunal has right and jurisdiction to reduce

the personal penalty, it can do so only after assigning good and

valid reason.

Despite service of notice on respondent, nobody has

chosen to appear on its behalf.

We have considered the submission of Mr.Singh and

we find substance in that. Relevant portion of the judgment of the

Tribunal reducing the personal penalty has been quoted in the
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preceding paragraph of this order. It does not indicate any reason

much less valid reason. It is well settled that whenever a Court or

Tribunal is given discretion, the discretion has to be exercised on

sound principles, which must appear from the order itself. In the

impugned order, no reason at all has been assigned. This, in our

opinion, vitiates the order reducing the penalty.

Accordingly, the answer to the substantial question

of law formulated is in the negative and it is held that the Tribunal

erred in reducing the personal penalty without assigning any

reason. The matter will now go back to the Tribunal, who shall

consider the matter afresh bearing in mind the observations

aforesaid.

The reference is answered accordingly.

Tax case stands disposed off.

(Chandramauli Kr.Prasad, J.)

(Dr. Ravi Ranjan, J.)

Patna High Court,
Dated, 15th of September,2008.

NAFR/Narendra/