2007 (7) TMI 307 - SC - Central Excise

Whether section 11AC of the Central Excise Act, inserted by the Finance Act, 1996, with the intention of imposing mandatory penalty on persons who evade payment of tax, should be read to contain mens rea as an essential requirement?

Held that:- As in the present cases, the assessee had challenged the vires of rule 96ZQ(5). By the impugned judgment, the Gujarat High Court has read down the said rule incorporating the mens rea requirement. It is made clear that if the larger Bench takes a view to say that the penalty under the said clause is mandatory, then it would still be open to the assessee to challenge the vires of the said rule 96ZQ(5) and, therefore, in that event, the matter has to be kept before the Division Bench for passing appropriate orders. Direct the Registry to place our order in this batch of civil appeals before the hon'ble Chief Justice of India for appropriate directions.