TMI Blog2014 (3) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... icient to impose penalty on a producer or manufacturer. There should be an element of intention to evade payment of duty. Unless the authorities come to the definite conclusion that there was an intention to evade the payment of duty, a penalty cannot be imposed. We have perused the order of the Assistant Commissioner and the Commissioner Central Excise (Appeals). No case of clause (a), (b), (c) or (d) of Rule 25 has been made out. No case of fraud, collusion or any wilful statement or suppression of fact, or contravention of any other provisions of the act or of the rules made therein with the intent to evade the payment of duty, has been made out, which made respondents liable to pay duty as determined under sub-section (2) of section 11AC and liable to pay penalty - No substantial question of law arises - Following decision of COMMISSIONER OF C. EX., GUNTUR Versus ANDHRA CEMENTS LIMITED [2007 (4) TMI 265 - HIGH COURT OF JUDICATURE FOR ANDHRA PRADESH AT HYD] - Decided against Revenue. - Central Excise Appeal Defective No. - 32 of 2014 - - - Dated:- 7-3-2014 - Hon'ble Rajes Kumar And Hon'ble Ashwani Kumar Mishra,JJ. For the Appellant : Amit Mahajan, Sr. S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal further observed that the order of the tribunal in the case of Saurashtra Cement Ltd. Vs. CEE has been affirmed by the Gujrat High Court in the case of CCE Vs. Saurashtra Cement Ltd. reported in 2010 (260) ELT 71 (Guj). Against the said order the Special Leave Petition has been dismissed. Tribunal accordingly on the facts of the case has upheld the penalty at Rs. 5,000/- under Rule 27. Learned counsel for the appellant submitted that the respondent in the return has stated that duty has been deposited while the duty has not been deposited and this amount to misrepresentation or concealment of fact and therefore, the provision of Section 11 AC has rightly been invoked and the penalty levied under Section 27 was justified. Learned counsel for the respondent submitted that Section 11 AC can be invoked only in a circumstance where there is a misstatement or concealment of fact with intent to evade the duty. No such case has been made out. The respondent has furnished the return disclosing the production for the relevant period and the duty payable thereon. The only contravention was that the amount of duty payable was not deposited within the specified period along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the rules. Admittedly when the goods were removed, no excise duty was required to be paid at that point of time. As such, it cannot be said that the contravention of the nature mentioned in the said clause has been committed by the appellant. Clause (b) is to the effect that the manufacturer does not account for any excisable goods manufactured by him. Admittedly, the said clause does not stand contravened inasmuch as the goods were duly reflected in the statutory records. Similarly, clause (c) is not contravened inasmuch as the appellant has not manufactured goods without applying for registration. Clause (d) refers to contravention of any of the provisions of the rules with intent to evade payment of duty (emphasis provided). Admittedly, the excisable goods were entered in records, cleared on Central Excise invoices and duty was also paid subsequently, though belatedly along with interest. As such, the said clause (d) is also not attracted. In such a scenario, the invocation of Rule 25 for imposition of penalty for delayed deposit of duty is not in accordance with the law. Against the order of the tribunal, the Commissioner of Central Excise has filed the appeal, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court further observed that a bare perusal of this Rule would suggest that evasion of payment of duty is not sufficient to impose penalty on a producer or manufacturer. There should be an element of intention to evade payment of duty. Unless the authorities come to the definite conclusion that there was an intention to evade the payment of duty, a penalty cannot be imposed. Considering the facts before the Andhra Pradesh High Court, the Court observed that there is a finding of the Tribunal that the circumstances were beyond the control of the respondent-company as the matter was pending before BIFR, and as such, the amounts could not be deposited by the respondent-company within time and as soon as it was in a position to make the payment, the respondent-company made the payment not only of the duty, but also the interest calculated under Rule 8(3) of the Rules. The Court, therefore, come to the conclusion that the Tribunal has correctly interpreted Rule 25 of the Rules and the penalty cannot be imposed on the assessee company. A similar issue has come up before the Kerala High Court in the case of Superintendent of Central Excise Vs. Sance Pharmaceuticals (Supra). The Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down the condition and circumstances that would attract penalty and the various proviso enumerate the condition, subject to which and the extent to which the penalty may be reduced. The Court further took the view that the penalty provision of section 11AC would come into play only after recording a finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. The penalty under section 11AC is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in that section. The Court further held that section 11AC would not apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. It is also relevant to mention here that applicability of Rule 25 is subject to the provisions of section 11AC of the Act. The term subject to in the context assumes some importance. The Apex Court in the case of Commissioner of Ce. Ex., Bhavnagar Vs. Saurashtra Chemicals Limited, 2007(212) E.L.T. 7(S.C.), after referring to its earlier decisions observed that the term subject to is an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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