ORDER
V.P. Gulati, Vice-President
1. The prayer in the application is for dispensation of pre-deposit of penalty of Rs. 54,201,88 levied on the appellants/applicants under Rule 173Q of the Central Excise Rules, 1944. Penalty has been imposed for the reason of non-payment of duty of Rs, 54,20,188.00 which was required to be paid on the goods removed by the appellants. The demand of duty as such is not contested by the appellants.
2. Shri Ramasubramanian, the learned Consultant for the appellants has pleaded that some omission and mistake had occurred in the factory because of changes of clerical staff and certain goods which should have been cleared on payment of certain goods in respect of which MODVAT Credit should have been reversed were taken out of the factory without compliance with the law as above. He has pleaded that while the lower authority has held non-payment of duty was detected by the audit party, the fact remains that the appellants themselves detected the lapse and came forward to pay the duty. He has pleaded that the appellants on their own reckoned the duty liability as Rs. 74,59,196 and paid the same even prior to the drawal of the proceedings against the appellants. Be that as it may, he pleaded that the appellants were not liable to levy of penalty at 100% based on the latest amendment of law and penalty should have been levied taking into consideration the bona fides of the appellant and their conduct in the matter in their coming forward to pay the duty after coming to know of their lapses which resulted in non-payment of duty earlier. He has pleaded that as it is, there is excess payment of Rs. 20,39,008. He has pleaded that as the lower authority has not rightly interpreted the law regarding levy of penalty inasmuch as the amended provisions of law for mandatory penalty under Section 11A could not be invoked. In this connection he referred us to the ruling of the Hon’ble Supreme Court in the case of Brij Mohan v. Commissioner of Income Tax, New Delhi reported in 148 ITR wherein the Hon’ble Supreme Court has held as under:
The case of the assessee is that an assessment proceeding for the determination of the total income and the computation of the tax liability must ordinarily be made on the basis of the law prevailing during the assessment year, and inasmuch as concealment of income is concerned with the income relevant for assessment during the assessment year, any penalty imposed in respect of concealment of such income must also be governed by the law pertaining to that assessment year. We are unable to accept the contention. In our opinion, the assessment of the total income and the computation of tax liability is a proceeding which, for that purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income. And this is so notwithstanding that the income concealed is the income assessed to tax. In the case of the assessment of income and the determination of the consequent tax laibility, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax liability determined. The rate of tax is determined by the relevant Finance Act. In the case of a penalty, however, we must remember that a penalty is imposed on account of the commission of a wrongful act, and plainly it is the law operating on the date on which the wrongful act is committed which determines the penalty. Where penalty is imposed for concealment of particulars of income, it is the law ruling on the date when the act of concealment takes place which is relevant. It is wholly immaterial that the income concealed was to be assessed in relation to an assessment year in the past.
He pointed out that the Hon’ble Supreme Court has clearly held that since penalty is imposed on account of the commission or wrongful act, and it is the law operating on the date on which the wrongful act is committed which determines the penalty. He therefore, pointed out that the Commissioner had the discretion for the purposes of levy of penalty taking into consideration the facts and circumstances of each case relating to non payment of duty and the conduct and bona f ides of the assessee. In this case he has pleaded that the penalty levied equal to the duty due to be paid could not have been levied. He therefore, prayed that the Collector should have levied only a nominal amount as penalty.
3. Heard Shri S. Murugandi, the learned DR. He has pleaded that the goods were admittedly cleared without payment of duty and without compliance with the requirement of law and but for the audit of the appellants factory, the appellants would have got away with the evasion of duty. The amount being large, a heavy penalty is called for.
4. We have considered the pleas made by both the sides. We find that the appellants are not disputing payment of duty and they have also paid the duty amount as demanded in terms of the impugned order. In fact as per the record, they have paid over Rs. 20 lakhs over and above the duty which was required to be paid. The plea taken by the appellants is that there was some omission and mistakes committed by the Clerical staff in the matter of removal of goods. We observe that the appellants are a major manufacturing unit and they have an organised set up and it is expected that they would work out their system in a manner that large scale removal of goods without payment of duty does not take place. The appellants’ unit has been in existence for a long time. Under the SRP scheme, a lot of faith is reposed in the assessee and it is expected that they organise their internal operations in a manner that due compliance with the law is ensured. The appellants therefore, cannot be allowed to take advantage of their own omission of this magnitude. The removal of the goods without payment of duty has been detected on the audit of the appellants unit. In this background, prima facie, we find that there is no infirmity in the order of the lower authority that the appellants are liable to penalty. Taking into consideration however, the judgement of the Hon’ble Supreme Court cited supra and the fact that duty has already been paid we hold that ends of justice would be served if the appellants are called upon to pre-deposit a sum of Rs. 10 lakhs (Rupees Ten lakhs) on or before 31.3.1997 and report compliance on 31.3.1997. Ordered accordingly. In case there is any excess amount which is stated to have been paid over and above the duty which was required to be paid, the pre-deposit could be adjusted from that amount. The appellants can approach the concerned departmental authorities in this regard. Subject to above, pre-deposit of the balance amount is waived and its recovery stayed pending appeal. The matter will be called on 31.3.1997 for reporting compliance.
(Pronounced and dictated in open Court).