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TMI Blog2010 (3) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and H.R.) that the adoption of the rate of 8% excise duty for diversion of inputs as such, was a mistake due to the invoice raised in the computer system, treating the input as a manufactured item. The failure of reversal of actual credit availed by them was admitted by the petitioner. On the very next day of inspection, the differential duty for the post removal worked out to Rs. 19,41,917/- was paid on 31-10-2009. They had also written a letter on 3-11-2009 to the respondents to condone the inadvertent error. The interest thereon was also remitted to the tune of Rs. 52,377/- on 25-11-2009. 4. In the background of the said facts, the petitioner received an intimation on 20-11-2009 proposing to impose deterrent measures as contemplated under Notification No. 32/2006-C.E. (N.T.), dated 30-12-2006 as amended by Notification No. 15/2009-CE. (N.T.),dated 10-6-2009 for the said violation. The Petitioner explained that the mistake had occurred only due to the system generated invoices treating the goods as finished goods and that there was no mistake committed knowingly and hence prayed for dropping of the action. 5. The petitioner submitted that due to oversight, on the inadvertent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led on the inputs cleared as such to M/s. Technical Stampings Automotive Ltd. 9. Learned counsel appearing for the petitioner submits that the failure to reverse the duty equal to the Cenvat credit on the input was unintentional and that it was only on account of the computer generated invoices calculating the duty at the current rate that had resulted in the mistake of short-payment; consequently, there being no mala fide intention to defraud the Revenue. This is evident from the fact that the petitioner had immediately paid the differential duty; consequently, there was no ground for taking any punitive action against the petitioner. 10. Learned counsel appearing for the petitioner pointed out that the Notification No. 32/2006-C.E. (N.T.), dated 30-12-2006 applies only to such cases where the manufacturer is prima fade found knowingly involved in committing the offence. In the absence of any motive shown and the explanation made, the proceedings are liable to be set aside. In this connection, learned counsel placed reliance on the decision of the Bombay High Court reported in 2009 (234) E.L.T. 578 (Hiren Aluminium Ltd. v. Union of India); particularly paragraphs 18, 19 and 20 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing for the respondents. 13. The petitioner had purchased CR sheets in coil from M/s. Hysco Steel India Ltd. and availed Cenvat credit of the duty paid on them. They cleared the CR sheets as such to M/s. Technical Stampings Automotive Ltd., but had not paid the full amount of Cenvat credit availed by them on such inputs cleared by them. The allegation of the respondents is that, they paid lesser duty of 8% and they should have reversed the Cenvat credit availed on the CR sheets, which they failed to do so. Apart from this, instead of showing the tariff item as CR sheets in coil form, they had declared it as non-existent tariff item in their clearance invoice. These, violations were found at the lime of inspection. It is also relevant to note that the petitioner, immediately after the inspection, had remitted the differential duty. The petitioner had taken a consistent stand that they had not committed the mistake knowingly, but put the blame on the computer generated invoices keeping the current rate of duty and hence, had resulted in the error in arriving at the proper rate of duty. The petitioner's contention as regards the scope of the phrase "knowingly" has to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in para 1 for the second time or subsequently every removal of goods from his factory may be ordered to be under an invoice which shall be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the said goods are removed from the factory or warehouse. Explanation I - It is clarified that a person against whom the order under sub-para (3) of para 4 has been passed may continue to take Cenvat credit however, he would not be able to utilize the credit for payment of duty during the period specified in the said order. Explanation II - For second time or subsequent, offence, the restriction specified in clauses (i) and (ii) may also be imposed. (2) Where a first stage or second stage dealer is found to be knowingly involved in committing the type of offence specified at clauses (d) or (e) of para 1, the registration granted under rule 9 of the Central Excise Rules 2002 may be suspended for a specified period. Explanation. - During the period of suspension, the said dealer shall not is sue any Central Excise Invoice. However, he may continue his business and issue sales invoices without showing excise duty in the invoice and no Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue an order specifying the type of facilities to be withdrawn or type of restrictions imposed, along with the period for which said facilities will not be available or the period for which the restrictions shall be operative." 15. The said notification was amended under Notification No. 15/09 dated 10th June, 2009 by inserting Clause (g) in para 1. A reading of the notification dated 30-12-2006 thus show that imposition of restriction on the facilities of payment of duty is more in the nature of a penal action to be visited on a prima facie finding of "knowingly involved in committing the offence" as specified in para 1 of the notification. 16. Learned Senior Central Government Standing Counsel appearing for the Revenue, placed reliance on the decision reported in 2008 (231) E.L.T. 3 (S.C.) = (2003) 13 SCC 369 (Union of India (UIO) v. Dharamendra Textile Processors) as well as 2009 (239) E.L.T. 385 (S.C.) = (2009) 13 SCC 461; Commissioner of Central Excise, Pune v. S1CY India Ltd.) as regards the imposition of Penalty. In the decision reported in 2009 (239) E.L.T. 385 (S.C.) = (2009) 13 SCC 461; Commissioner of Central Excise, Pune v. SKY India Ltd.), the Apex Court pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A reading of the notification shows that the emphasis for visiting penal consequences by way of withdrawal of the facility was only where the violation is attributable to a knowledge on the part of an assessee as to the wrong claim. The notification states that where the manufacturer is prima fade found to be knowingly involved in committing the offence, then the assessed is visited with a restriction on the facilities enjoyed as regards payment of duty. The emphasis, hence, is a prima facie finding as to the knowledge on violation, which means an intention to secure certain advantages under the Cenvat credit, which law otherwise does not permit. Hence, on the facts of this case, unless and until the Revenue is able to show that the assessee knowingly made use of the computer generated invoices with a view to gain unmerited advantage, it is difficult to accept, the plea of the respondents that motive could be attributed to the petitioner to visit it with penal consequences. 19. It may be pointed out that even though the notification does not use the word 'wilfully', but it merely requires a knowledge as to the violation, it is dear that unless and until the respondents establishes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, the penal restrictions spoken to consequent on the violations given under the notification will not be applicable to the petitioner's case. 22. Learned Senior Central Government Standing Counsel pointed out that, on an earlier occasion, the Settlement Commission had also found as regards the practice of the petitioner which did not speek well about the petitioner. In the circumstances, penal consequences must necessarily follow. A perusal of the Settlement Commission's order shows that there vas no wilful evasion of duty explicitly brought out in the show-cause notice. A reading of the order now, under challenge makes no reference to the earlier notices to bring the petitioner's case under the latter part of the notification. Having regard to the scope of the Settlement Proceedings, I do not find any justification in the plea of the respondents that the proceedings of the Settlement Commission will have relevance in testing the applicability of the notification. Hence, I have no hesitation in setting aside the order impugned in the writ petition. Accordingly, the same stands set aside and the writ petition is allowed. No costs. Connected M.P. Nos. 2 and 3 of 2010 are c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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