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Case Laws
Showing 361 to 380 of 678 Records
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2007 (7) TMI 327
Interest and penalty - Whether an assessee during the period of forfeiture of facility for payment of duty on fortnightly basis, is required to pay duty out of the PLA and whether failure on his part to do so would attract interest and penal provisions or not? - Held that: - the provisions of Rule 8(4) are pari materia with Rule 173G(1)(e) and the non-obstantive clause was introduced by insertion of sub-rule 3A in Rule 8 of the Central Excise Rules, 2002, only w.e.f. 31-3-2005, while the period in dispute in the present case is prior to that date - during the period of forfeiture of the facility of payment of duty on fortnightly basis, an assessee can discharge duty liability either out of PLA or by utilising Cenvat credit and failure on his part to do so would not attract interest and penalty, and answer the reference in the negative - decided in favor of assessee.
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2007 (7) TMI 326
Issues involved: Interpretation of penalty provisions under Section 11AC of the Central Excise Act, 1944.
Summary:
The High Court of Judicature of Bombay at Aurangabad heard a case where a show cause notice was issued to the respondent-assessee demanding an amount along with penalty under Section 11AC of the Act. The assessee did not respond, leading to confirmation of the demand and imposition of penalty by the Deputy Commissioner. The Department appealed to enhance the penalty, citing a Supreme Court decision. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) refused to follow the decision, leading to the admission of the appeal by the High Court on the question of whether there is discretion under Section 11AC to impose a penalty less than the duty evaded.
The High Court analyzed Section 11AC and noted that the legislature did not set upper or lower limits for the penalty, requiring it to be equal to the duty evaded intentionally. Even with a proviso allowing for a reduced penalty if duty and interest are paid promptly, the authority has no discretion to impose a penalty different from the duty evaded. The Court referred to a previous case to support this interpretation.
The Court justified the stringent penalty provisions under Section 11AC, emphasizing that it applies only to intentional duty evasion through fraud or collusion. The penalty is considered a form of punishment for deliberate evasion, with no room for discretion in imposing a penalty different from the evaded duty.
Ultimately, the High Court accepted the argument that under Section 11AC, no discretion is allowed in imposing a penalty, directing the imposition of a penalty equivalent to the duty evaded on the respondent-assessee.
In conclusion, the appeal was allowed, and the penalty equivalent to the duty evaded was imposed on the respondent-assessee, disposing of the first appeal accordingly.
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2007 (7) TMI 325
Appeal by Department - Authorisation - Jurisdiction - Held that: - the issuance of corrigendum can have no effect as the power could only be conferred on the Regional Commissioner of Central Excise who was the adjudicating authority. In the instant case, the Commissioner of Central Excise (Aurangabad) was not adjudicating authority. Even otherwise also he could not have preferred the appeal - appeal dismissed.
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2007 (7) TMI 324
The High Court of Judicature at Bombay ruled in favor of the Petitioner, condoning a five-month delay in filing an appeal due to shifting offices. The impugned order was set aside, and the appellate authority was directed to decide the appeal on its merits. No costs were awarded.
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2007 (7) TMI 323
Production capacity based duty - Held that:- If the authorities, after declaring particular product as "notified goods", proceeds to fix the annual production capacity of the factory, it has to do so by giving proportionate increase, if during the year under consideration for the purpose of fixation of annual production capacity, the factory was closed for certain period, manufacturer will be able to evade the duty, by taking the production of six months to be the annual production capacity, because factory was closed for six months during the year, taken as standard for the purpose of determination of annual production capacity.
We are afraid, proviso relied upon by learned Counsel for the appellant does not come to the rescue of the appe1lant-assessee. On the contrary, the same supports the department during the process of determination of annual production capacity. The benefit of proviso to sub section (3) and sub-section (4) of Section 3A of the Act, is not available to the appellant herein, if it has enjoyed benefit of payment of excise duty under procedure prescribed by Rule 96-ZP(3).Therefore, no substantial question of law arises for our consideration.
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2007 (7) TMI 322
Cenvat/Modvat credit - it is evident that the assessee-company was reversing the credits upon which Modvat credit was claimed before the inputs were put into process for production of exempted goods - Held that: - the case of the assessee was squarely covered by circular issued by the Central Board of Excise and Customs No. 231/66/96/ES dated 25-7-1996 wherein the Board had clarified that the credit of the duty paid on the common input is admissible when used in the manufacture of the final product once the said credit on duty paid inputs going into the exempted category of the final product is debited in the RG 23A Part II account before removal of the exempted final product on actual or pro rata basis - decided against Revenue.
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2007 (7) TMI 321
Cenvat/Modvat credit - Whether the learned CESTAT is right in holding that the respondent/assessee can avail the Modvat credit on the furnace oil beyond the extent of 10% as prescribed in the Notification No. 5/94-C.E. (N.T.)?
Held that:- In the light of notification under Section 112(1) held that no credit is admissible on any duty paid on high speed diesel oil at any time during the period commencing on and from 16-3-1995 and ending with the date the Finance Act, 2000 received assent of the President i.e. on 1-4-2000. Learned Assistant Solicitor General although claimed that high speed diesel oil was used as fuel in the reported case, he is not able to satisfy us that high speed diesel oil referred in Section 112 of Finance Act, 2000 can be equated with furnace diesel oil which is the input with which we are concerned in present appeal and we are unable to agree with him that because it is used as fuel it can be so equated, covered and governed by Section 112 of the Finance Act, 2000. The decision relied upon, we are of the view, is not applicable.
Thus the substantial question of law as framed by us stands answered in the affirmative. Hence appeal is dismissed.
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2007 (7) TMI 320
Issues involved: Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal regarding clandestine removal of goods and duty payment.
Details of the judgment:
1. The Tribunal found that the appellants admitted clandestine removal of goods without retraction, paid duty immediately upon detection, and did not contest the shortages in finished stock and duty paid godown. The partners' statements and signed packing slips indicated removal without payment of duty, and no duty paying documents were produced. The Tribunal dismissed the appeal based on these findings.
2. The plea regarding cancellation of orders could have been raised during the investigation, but the goods corresponding to the packing slip and lorry receipt were not found. The appellants did not contest this finding, leading to the Tribunal's conclusion of fraudulent conduct in the removal of goods without duty payment.
3. The Tribunal considered the appellants' arguments regarding substantial questions of law as academic, given the Commissioner's findings and the partner's unretracted statement. The appellants' capacity to manufacture the clandestine goods was not a relevant issue in light of the established facts. Case laws cited by the appellants were deemed inapplicable to the present proceedings, leading to the dismissal of the appeals.
4. The judgment highlighted the importance of the partners' statements, lack of retraction, and the interception of goods without duty payment. The Tribunal's decision was based on the evidence of clandestine removal and failure to produce necessary documents, ultimately resulting in the dismissal of the appeals.
5. The judgment emphasized the significance of the partners' signed documents, lack of contestation regarding shortages, and the immediate duty payment upon detection. The Tribunal's decision was upheld based on the established facts and the absence of merit in the appellants' arguments, leading to the dismissal of the appeals.
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2007 (7) TMI 319
Issues involved: Detention of Machinery/Plant by Central Excise department u/s Central Excise Act 1944 for unpaid excise dues by previous owner, Jurisdiction of department to detain machinery of new owner for old liabilities.
Summary:
1. The petitioner-company challenged a detention order dated March 4, 2005, where the Machinery/Plant was detained due to unpaid excise dues by the previous owner, M/s. Ganga Sagar Pvt. Ltd., which was later purchased by the petitioner-company from M.P.F.C.
2. Petitioner claimed the detention was unauthorized as the liabilities of the previous owner were not discharged before the purchase. The respondents relied on proviso to Section 11 of the Act and Rule 230(2) of the Central Excise Rules, 1944, to justify the detention.
3. The petitioner's counsel argued that the new Central Excise (No. 2) Rules, 2001, enforced from June 21, 2001, did not provide for enforcing previous owner's liabilities on the new buyer, and the proviso to Section 11 came into force after the petitioner's purchase in the period from 2001-2004.
4. The jurisdiction and authority of the department to detain the machinery without examining the legality of the action were questioned. The court noted that if there was no provision to enforce the previous owner's liabilities on the new owner, the department's action would be without jurisdiction.
5. The court allowed the Writ Petition to the extent that the Assistant Commissioner was directed to examine whether detaining the Plant/Machinery of the petitioner-company for the previous owner's liabilities was valid. The petitioner could raise all other pleas before the Assistant Commissioner as well.
6. The parties were directed to appear before the Assistant Commissioner on August 9, 2007, who was instructed to conclude the proceedings within two months and adjudicate on all raised pleas. The interim protection granted by the Court would continue until the matter was decided by the Assistant Commissioner.
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2007 (7) TMI 318
Issues: Violation of Rules of Natural Justice in Customs Case
Violation of Rules of Natural Justice:
The petitioner challenged an order passed by the Assistant Commissioner of Customs, alleging a violation of natural justice. The petitioner claimed that the matter was fixed for a personal hearing on 9-3-2007, but when he sought further time and appeared on 19-3-2007, he was informed that the case had already been concluded on the earlier date. The impugned order stated that the importers did not attend the personal hearing on 9-3-2007, leading to a decision based on merits without their presence. However, a counter affidavit clarified that the date mentioned in the order was a mistake, and the actual date for the personal hearing was 19-3-2007. The court found confusion regarding the hearing date and whether the petitioner was given a chance for a personal hearing. Consequently, the court held that there was a violation of the Rules of Natural Justice, leading to the setting aside of the impugned order.
Remedy and Directions:
In light of the violation of natural justice, the court directed that the impugned order should be treated as a show cause notice. The petitioner was granted ten days to file a reply, following which the respondents were instructed to hear the parties and pass appropriate orders in accordance with the law. The court disposed of the writ petition accordingly, without imposing any costs on either party.
This judgment highlights the importance of adhering to the principles of natural justice in administrative proceedings, emphasizing the right to a fair hearing and the opportunity to present one's case effectively. The court's decision to set aside the order and provide an opportunity for the petitioner to respond underscores the significance of procedural fairness in legal matters, ensuring that parties are treated equitably and have a chance to be heard before decisions are made.
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2007 (7) TMI 317
Issues:
Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
Analysis:
The case involved an application by the Revenue - Commissioner, Central Excise & Customs, Indore under Section 35-H(1) of the Central Excise Act, 1944, requesting the High Court to call for a reference on the question of whether the penalty under Section 11AC of the Act would be equal to the amount of duty payable by the assessee in cases involving fraud, collusion, wilful misstatement, suppression of facts, or contravention of any provisions with intent to evade payment of duty. The Tribunal had initially upheld the penalty imposed on the assessee but reduced it to Rs. 25,00,000 considering the facts and circumstances of the case.
The Commissioner of Central Excise & Customs was dissatisfied with the reduced penalty and sought reference from the Tribunal to the High Court. However, the Tribunal declined to make a reference, stating that no substantial question of law arose for reference. The High Court, after hearing both parties and examining the case record, concluded that there was no referable question of law arising from the Tribunal's order. The High Court noted that the Tribunal had upheld the penalty in principle but had reduced it to Rs. 25,00,000 in the interest of justice and in accordance with applicable laws. The High Court determined that the issue at hand was primarily a question of fact regarding the Tribunal's exercise of discretion in reducing the penalty amount, which was substantial.
Ultimately, the High Court found the application seeking reference to be devoid of merits and dismissed it. The High Court emphasized that the matter did not involve any substantial question of law capable of being referred to the Court for consideration. The decision highlighted that the Tribunal's action in reducing the penalty amount was based on discretion and considerations of justice, rather than a legal issue warranting further review by the High Court.
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2007 (7) TMI 316
Issues:
Application under Section 35-H(1) of the Central Excise Act, 1944 for reference of questions of law arising from Tribunal's order.
Analysis:
The judgment involves an application made by the Commissioner, Central Excise & Custom, Indore under Section 35-H(1) of the Central Excise Act, 1944, seeking the High Court to direct the Tribunal to refer questions of law arising from the Tribunal's order dated 12-11-2002 in Case No. A/1112-13/02-NB. The Court heard the Assistant Solicitor General for the applicant and noted that the questions proposed by the revenue indeed constitute questions of law that need to be answered by the Court in its reference jurisdiction under Section 35-H(1) of the Act. The Court emphasized that when an issue involves interpretation of a section of the Act on admitted facts and is not squarely covered by higher courts, it qualifies as a question of law for reference. Despite the possibility of the Tribunal's view being upheld on merits, it does not negate the question's nature as a legal one for the Court's consideration.
The Court decided to allow the application made by the Revenue and directed the Tribunal to refer two specific questions of law to the Court. The first question pertains to the justification of the Tribunal's decision regarding the utilization of credit of Additional Duty of Excise paid on inputs only for the payment of Additional Excise Duty leviable on final products in the context of Textiles & Textile Articles. The second question questions the Tribunal's decision on the utilization of credit of Additional Duty of Excise paid on inputs for the payment of Additional Excise Duty leviable on final products concerning Goods of Special Importance. The Court instructed the Tribunal to send the statement of the case to the Court within three months along with all relevant documents for further examination. Additionally, the Court ordered the Registry to provide all original papers related to the case to the Tribunal to facilitate the reference process as directed.
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2007 (7) TMI 315
Cenvat/Modvat credit - inputs used in the manufacture of electricity supplied to the residential complexes within the licensed premises - Held that: - The fact that the residential complexes are situated within the licensed premises would not entitle the assessee to avail credit of duty paid on furnace oil used in the manufacture of electricity supplied to the residential complexes. It is necessary to establish that the electricity is used for any purpose connected with or related to the production of final products. In our opinion, supply of electricity to the residential complexes situated within the factory premises are neither connected with or related to the production of the final products - appeal dismissed.
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2007 (7) TMI 314
Issues involved:
Petition seeking quashing of show-cause notice, maintainability of writ petition against show-cause notice.
Analysis:
The petitioners filed a writ petition seeking relief to quash a show-cause notice issued by respondent No. 2. The Assistant Solicitor General raised a preliminary objection on the maintainability of the writ petition, citing cases from the Apex Court. The court referred to the dicta of the Apex Court in various cases, emphasizing that High Courts should not entertain writ petitions challenging show-cause notices unless there is an absolute lack of jurisdiction. The court highlighted that parties should respond to show-cause notices and participate in the investigative process before approaching the court. The court also mentioned a case where the High Court had wrongly interfered in a show-cause notice matter. The court noted that the petition did not argue lack of jurisdiction by the issuing authority. Consequently, the court declined to entertain the writ petition, following the principles laid down by the Apex Court. As a result, the writ petition was dismissed summarily.
This detailed analysis of the judgment showcases the court's adherence to the principles set by the Apex Court regarding the interference of High Courts in matters concerning show-cause notices. The court emphasized the importance of parties participating in investigative processes before seeking judicial intervention. The judgment serves as a reminder that writ petitions should not be entertained as a matter of routine and should only be considered in exceptional circumstances where there is a clear lack of jurisdiction.
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2007 (7) TMI 311
Evasion of custom duty - bail application - Held that:- Taking into account the nature and seriousness of the offence and reasonable apprehension of the witnesses being tampered with as also the larger interest of the public and the State, the petitioner does not deserve his release on bail. His bail plea is, therefore, declined and the petition is dismissed. However, keeping in view that the petitioner is in jail custody since 28th of February, 2007, the learned trial court shall endeavour to expedite the trial and conclude it within a period not later than six months from this date. The period of delay occasioned on account of adjournments sought on behalf of the petitioner shall not count towards this six months period.
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2007 (7) TMI 310
Seizure of the polyster fabric imported - demurrage charges which was sought to be deducted from the sale proceeds - Held that:- On confiscation under Section 126 of the Customs Act, the goods vest with the said authority. When the goods were in custody and possession of the customs department, they were stolen. Admittedly, the goods were covered by a valid licence and, therefore, goods could not have been seized. The goods have to be returned to the respondent or the value thereof paid. Since the goods were stolen, while they were in custody of the customs department, they are liable to make good the loss suffered by the respondent.
As there was delay in selling the goods even after the orders were passed by this Court and, therefore, the aforesaid burden to pay demurrage charges cannot be fasten on the respondent. Thus modify the order of the learned Single Judge to the extent that the demurrage charges would not be payable by the respondent for the period after expiry of six months from 4th April, 1988. The appellant will be liable to pay demurrage charges for this period.
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2007 (7) TMI 309
Taxing provisions - whether levy of 4% ad valorem rate of duty in respect of Clause 2(i) of preparations in the schedule appended to the Medical and Toilet Preparations (Excise Duties) Act, 1955, as amended by Finance Act, 2000, is null and void as affecting Article 14 and 19(1)(g) of the Constitution of India?
Whether restricted preparations and spirituous preparations cannot be made applicable to ayurveda drug manufacturers for imposing any restrictions prescribed therein?
Held that:- Ad valorem rate of duty as levied for other medical preparations containing alcohol. In respect of Allopathic medicinal preparations and for similar medicinal preparations containing alcohol, which are not capable of being consumed as ordinary alcoholic beverage, 20% ad valorem duty has been prescribed under the same schedule of the M & TP Act. There are other medicinal preparations for which much more than 4% ad valorem rate of duty has been prescribed and, thus, 4% ad valorem duty, as prescribed vide amended clause 2(i) of Schedule, cannot be held to be arbitrary or excessive.
t the petitioner has failed to highlight any cause of action to entertain the second writ petition and for giving any declaration as sought for. There is nothing on record to suggest that on any particular day, at a particular time, district authorities or the Superintendent of Police, Kanyakumari District, or any officer empowered under Act, 1937 or Rules, 1984, visited the premises of the petitioner or any other ayurveda drug manufacturer. In these circumstances, and in absence of cause of action, this Court is not deciding the issue as raised in the second writ petition. W.P.s dismissed.
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2007 (7) TMI 308
Claim to rebate on surcharge on Excise Duty denied - Held that:- The Notification dated 6/9/2004 had included the definition of Excise Duty only if consonance with the meaning of Excise Duty as was existing on the date Notification was issued, even if Explanation would not have been there the term Duty of Excise in ordinary circumstance would have included the surcharge levied as Education Cess in terms of Section 93 of the Act of 2004.
In view thereof, no hesitation to hold that impugned orders of Central Government as revisional authority and appellate order of Commissioner (Appeals) are patently erroneous and deserve to be quashed. Accordingly, writ petition is allowed, impugned orders are set aside to the extent the petitioner has been denied the claim to rebate on surcharge on Excise Duty appropriated by Union of India as Education Cess for funding Universalised quality basic education programme but was paid by the petitioner only as Duty of Excise w.e.f. 9-7-2004 to 5-9-2004. There is no contention about eligibility to rebate w.e.f. 6-9-2004.
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2007 (7) TMI 307
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.
See: 3 Member bench Decision [2008 (9) TMI 52 - SUPREME COURT]
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2007 (7) TMI 306
Penalty - Mandatory penalty - whether the said proceeding was maintainable in view of the fact that whereas the period of alleged contravention is said to be from 5-9-1995 to 7-9-1995, the provision of Section 11AC which was inserted in the Act by Act 33 of 1996 only with effect from 28-9-1996 and as such could not have been invoked - Held that:- Section 11AC being a penal provision providing for a mandatory penalty, in our opinion, cannot be invoked in a case of this nature as the same would amount to give retrospective operation thereto which is impermissible in law - Following decision of Commissioner of Central Excise, Coimbatore v. ELGI Equipments Ltd. [2001 (1) TMI 90 - SUPREME COURT OF INDIA] - Decided against Revenue.
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