TMI Blog2013 (8) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... d any option to the assessee to pay duty demand with interest and penalty of 25% of the duty within 30 days from the date of adjudication, and therefore, the Tribunal in its order impugned maintained that the case of the assessee is squarely covered by the explanation to Section 11AC - The Tribunal also noted that the duty determined u/s 11AC(2) was subsequent to the year 2000 and, therefore, the case would be covered by the explanation to Section 11AC of the Central Excise Act. - Misc. Civil application No. 11 of 2013 In Tax Appeal No. 963 of 2011 - - - Dated:- 24-1-2013 - Akil Kureshi And Sonia Gokani,JJ. For the Petitioner : MR RJ Oza ORDER (Per : Honourable Ms. Justice Sonia Gokani) 1. This application for review is filed by the Revenue challenging the order of this Court dated 29.12.2011 passed in Tax Appeal No.963 of 2011 in the following background:- 1.1 The respondent is engaged in manufacturing of processed man made fabrics. The Department found un-accounted fabrics and incriminating documents during the visit on 17.3.1996, this was since treated as indicative of clearance of goods without due payment of duty under the law, the show cause notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipt of the order of the Tribunal for availing benefit of reduced penalty under the proviso to section 11AC of the Central Excise Act, 1944? [c] Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in applying decisions of the Tribunal in case of M/s. Swati Chemical Industries and decision of this Hon ble Court in case of M/s. Akash Fashion Prints Pvt. Ltd. without recording comparative facts of the said cases and case of the respondent and recording findings thereon, for giving option to the respondents of reduced penalty? [d] Whether the impugned order of the Tribunal can be said to be an order passed in accordance with law? 4. This Court dismissed such appeal in limine on the ground that no new question of law arises. 5. Revenue challenged the same before the Apex Court by preferring SLP (Civil) C.C. No.10987 of 2012 also seeking condonation of delay. This was withdrawn with a liberty to file appropriate review application and such permission since was granted by the Apex Court, present application is preferred raising various grounds. 6. Learned Senior Counsel Mr. Oza appearing for the Department has urged that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was noted that in some cases the assessee had challenged the vires of Rule 96ZQ(5) and the Gujarat High Court held that the said rule incorporated the requirement of mens rea. The Division Bench clarified that if the larger bench takes a view to say that the penalty leviable under the said clause is mandatory, it is still open to the assessee to challenge the vires of Rule 96ZQ(5). 4. During the course of hearing, learned counsel for the parties agreed that a similar issue is involved in respect of Rule 96ZO. 5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in Section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to Sections 271F and 272A of the said I. T. Act. Reliance is placed on a decision of this Court in State of M. P. and Ors. v. Bharat Heavy Electricals (1997 (7) SCC 1) to contend that even if this Court held that it appears to give the expression that the imposition of penalty is mandatory, yet there was a scope for exercise of discretion. 10. When challenged, this Court in Tax Appeal No.963 of 2011 confirmed the order of the Tribunal in the following manner:- 2. Heard learned counsel Mr.R.J.Oza and perused the order of the Tribunal, which as relied on the decision in case of Swati Chemical Industries Ltd. Ors.,reported in 2009(248) ELT 421. This matter, when was challenged by way of this Appeal before this Court, the order of Tribunal was confirmed in case of Commissioner of Customs Excise, Ahmedabad-I v. Akash Fashion Prints Private Limited, reported in 2009 (239) E.L.T 439 (Guj). In various judgments of this Court, this view has been upheld. As the Department could not point out any reason for taking contrary view then already taken in earlier Tax Appeals, and with no question of law remain to be determined by this court, the present Tax Appeal fails and is dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee complies with requirement of second proviso to Section 11AC of the Act. It is in this context that the Tribunal has reduced the penalty amount. 7. In the circumstances, it is not possible to accept the submission on behalf of the appellant that the penalty ought not to have been reduced. The appeal is accordingly dismissed in absence of any substantial question of law. 12. This Court in the case of Exotic Associates vs. Commissioner of Central Excise reported in 2010(252) E.L.T. 49(Guj.), also was confronted with the identical issue. This Court considered the question in the light of the proviso of Section 11AC which talks about the option to give the assessee to pay the excise duty within 30 days from the date of the order and in lieu of that penalty under Section 11AC be reduced to 25% of the amount of excise duty levied in the order passed by the adjudicating authority. The Court referred to the decision of various High Courts as in the case of K.P. Pouches (P) Limited vs. Union of India, 2008(228) E.L.T. 31(Delhi). The Court also referred to the decision of Punjab Haryana High Court in the case of Commissioner of Central Excise, Rohtak V/s. J.R. Fabrics Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Officer. In that case, the order in original also imposes penalty which is equivalent to the amount of duty of excise assessed by the adjudicating authority. The assessee was, however, not given any option as to whether he wants to pay the duty within 30 days from the date of the adjudication order. The Court, therefore, took the view that the conclusion reached by the Tribunal that the assessee was liable to pay penalty to the extent 25% of the amount of duty of excise demanded by the officer concerned. While arriving at this conclusion, the Court has also considered the decision of the Apex Court in the case of Dharmendra Textile (Supra) and observed that the provisos first and second which were added in the year 2000 were not the subject matter of consideration before their Lordships in Dharmendra Textile Processor's case (Supra). The Court, therefore, did not find any substance in the contention raised on behalf of the revenue, especially, in the face of express provision made by the four provisos in the year 2000. 15. Considering the above judgment of the Delhi High Court as well as Punjab Haryana High Court and further considering the impugned order of the Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of such determination, as required under second proviso to Section 11AC of the Act. So far as second issue is concerned, Mr.Oza submitted that the adjudicating authority is not under any statutory obligation to set out in its order the availability of benefit of reduced penalty prescribed under proviso to Section 11AC of the Central Excise Act and to give an option to such person liable for penalty under that Section. Both these issues were dealt with by this Court in Tax Appeal No.572 of 2007 with tax Appeal No.869 of 2007 decided on 18.11.2009. It is also important to note that the adjudicating authority has not calculated the interest neither in the order-in-original nor even thereafter. It is, therefore, too much to expect from the respondent assessee to pay the interest alongwith the duty amount in absence of such calculation of interest. As far as statutory obligation of the adjudicating authority is concerned, the Central Excise Department itself has issued Circular on 22.5.2008 wherein it is clarified that in all cases wherein penalty under Section 11AC of the Act is imposed the provisions contained in the first and second proviso of Section 11AC should be mandatorily m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is called for in the order of the Tribunal. 14. As can be noted from the decisions mentioned hereinabove, this Court has followed a consistent view that the assessee is required to be given the option by the adjudicating authority where he is asked to pay a duty demand with interest and 25% of penalty within 30 days from the date of adjudication of the order and in such case, he would be liable to pay only 25% of the penalty. Whenever such option had not been given, the remand had been made to the concerned authorities. And period of 30 days is being considered, if in case option is not given earlier, from the date of availing such option. 15. In the present case also, the remand had been made to the Tribunal and in the order of remand, it was also directed to consider the provision of section 11AC and the Tribunal had had specifically noted that none of the two authorities below had availed any option to the assessee to pay duty demand with interest and penalty of 25% of the duty within 30 days from the date of adjudication, and therefore, the Tribunal in its order impugned maintained that the case of the assessee is squarely covered by the explanation to Section 11AC. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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