TMI Blog2013 (7) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... Durrez Ahmed, J (Oral) We have heard the learned counsel for the parties. The counsel are agreed that this appeal be disposed of at this stage itself. Two substantial questions of law arise for our consideration in this appeal. They are :- (1) Whether, in the facts and circumstances of the case, the Customs, Excise and Service Tax Appellate Tribunal was correct in law in upholding the penalty of Rs. 2 crores under Rule 173Q(1)(d) of the Central Excise Rules, 1944? (2) Whether the finding of the Tribunal in confirming the penalty under Rule 173Q(1)(d) of the Central Excise Rules, 1944 was not perverse inasmuch as the evidence produced by the appellant before the Commissioner in remand proceedings was not considered either by the Commissioner or by the Tribunal? 2. As can be noticed from the above questions, this appeal is only concerned with the question of penalty under Rule 173Q(1)(d) of the Central Excise Rules, 1944 (hereinafter referred to as the said Rules ). The issue with regard to the payment of central excise duty on the production of raw kimam and other ingredients such as saffron, musk, perfumes and other spices stands settled by the Supreme Court by virtue of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It was fully aware that those traders who produced similar compounds had their units licensed or registered and yet the assessee herein did not take steps to get the above two units, in which the impugned compound (kimam) was manufactured, registered or licensed. As stated above, it has been buying a similar kimam from various traders. These circumstances constituted evidence of suppression brought on record by the department in answer to which it was contended on behalf of the assessee that they were under a bonafide impression that the compound was not excisable and that the benefit of proforma and modvat credit together with the benefit of exemption under notification no.121/94 dated 11.8.1994 was substantially equal to the demand for duty herein and, therefore, there was no intention to evade payment of duty. We do not find any merit in these submissions. As stated above, the adjudication in this case was confined to the question of excisability and concealment of the existence of two units in which the compound (kimam) was manufactured. No explanation has been given by the assessee for not disclosing the affairs of these units, particularly when the assessee was in busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal also directed the commissioner to reconsider the quantum of penalty, fine etc. in the light of its findings on the applicability of the said notification. We do not wish to express any opinion on the applicability of the notification dated 11.8.1994. Suffice it to state, that, on the issue of excisability and clandestine manufacture and removal of the compound (kimam) from the two unlicensed/ unregistered units at 96, Okhla Industrial Estate, Phase-III, New Delhi / E-1, Maharani Bagh, New Delhi, we do not find any infirmity in the impugned judgment. Accordingly, these civil appeals filed by the assessees are dismissed with no order as to costs. 3. From the above it will be seen that on merits, the issue had been settled except with regard to the applicability of notification No.121/94-CE dated 11.08.1994. The Supreme Court had observed that the Tribunal had remanded the case to the Commissioner for re-examination of the limited question of its applicability. The Supreme Court further noted that the Tribunal had also directed the Commissioner to consider the quantum of penalty, fine etc. in the light of its findings on the applicability of the said notification. The Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rules alongwith the issue of intent to evade duty, that was in the context of the proviso to Section 11A(1) of the Central Excise Act, 1944 (hereinafter referred to as the said Act ). The learned counsel for the appellant submitted that at that point of time the Supreme Court had concluded that it was for the appellant to have demonstrated its bona fides by producing the relevant evidence to, inter alia, show a one-to-one relationship between the clearances of perfumed kimam from the two units in question and the receipt of the same by its other units which produced chewing tobacco from the perfumed kimam processed in the two units which are in question. He further submitted that at that point of time the appellant had not produced any evidence and it is for this reason that the Supreme Court concluded that the appellant was not able to demonstrate its bona fides and, therefore, the Supreme Court did not interfere with the Tribunal s findings that extended period of limitation prescribed in the proviso to Section 11A of the said Act had been correctly invoked. The learned counsel for the appellant however submitted that because the appellant had been given a second opportunity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these goods had been manufactured without obtaining registration from the Central Excise department and that the conduct of the party amounted to suppression of facts with intent to evade payment of duty, justifying demand of duty beyond the normal period of six months. Clearly, the elements of offence envisaged under Rule 173Q are present in the case of the party. I, therefore, have no hesitation in holding that the conduct of the party warranted imposition of penalty under Rule 173Q. XXXX XXXX XXXX XXXX XXXX 38. XXXX XXXX XXXX XXXX ii. I impose a penalty of Rupees two crores on the party under Rule 173Q(1) of the Central Excise Rules, 1994 read with Section 38 A of the Central Excise Act, 1994 . 8. Being aggrieved by this order the appellant filed an appeal being Excise Appeal No.1463/2005 before the said Tribunal. The appeal was in respect of other grounds as also on the point of penalty. By virtue of an order dated 07.04.2011 the Tribunal dismissed the appellant s appeal. However, since the said order only dealt with the other issues and the question of penalty had not been considered by the Tribunal in the said order dated 07.04.2011, the appellant filed an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The issues with regard to the applicability of notification No.121/94-CE and the reworking of the penalty under Section 173Q(1)(d) of the said Rules were not touched upon by the Supreme Court as the Tribunal had remanded the matter to the Commissioner for a consideration of those very issues. Now, we have already observed above that the issue of applicability of notification No.121/94-CE was subsequently concluded by the Supreme Court by virtue of its decision in Hari Chand Shri Gopal (supra). As a result, the learned counsel for the appellant conceded that the said notification would not apply even in the appellant s case. That left only the issue with regard to penalty to be decided. We feel that since the question of penalty had been reopened in view of the remand made by the Tribunal by virtue of its order dated 1.10.1999 and penalty proceedings being generally separate and independent of the quantum proceedings, it was incumbent upon the Commissioner to have examined the evidence that was produced at the stage of remand by the appellant which would in any way alter the case for levy of penalty on the appellant. In the first round the Supreme Court had observed that the bon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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