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TMI Blog2014 (9) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... er the present proceedings. (b) Whether the imposition of penalty under Section 11AC of the Central Excise Act, 1944 is automatic when it has been held by the Supreme Court in Commissioner of Central Excise, Chandigarh v. Pepsi Foods Ltd. reported in (2001) 1 SCC 601 = 2010 (260) E.L.T. 481 (S.C.) that criminal intent or "mens rea" is a necessary constituent in order to attract the penalty provision under Section 11AC." 3. The facts, in brief, are that the appellant is a business concern and engaged in the manufacture of C.I. Socket B, C.I. Socket C, C.I. Sole Plate and C.I. Brake Block falling under Chapter Heading No. 7307 and 8607 of the Schedule to the Central Excise Tariff Act, 1985. The officers of the Central Excise visited the factory premises of the appellant on 25th June, 1999. On visit they found that the finished goods were in excess as against its recorded balance in RG-I register maintained by the appellant. The details are as under : S. No. Item AS per RG 1 Register As per Panchnama Weight Difference 1. CI Socket B 860 3640 30 Kg 2780 Nos. (83.400) 2. CI Socket C 57 692 48 Kg 635 Nos. (30.480) 3. CI Brake Block 6158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,93,809/- 2,39,010/- 7. In respect of shortage of 1203 Nos. of Anchor Plate (finished goods) valued at Rs. 68,571/- involving duty of Rs. 10,971/-, in addition to duty, a mandatory penalty of Rs. 10,971/- under Section 11AC of the Central Excise Act, 1944 (for short "the Act, 1944") was imposed. 8. In respect of Pig Iron :- Pig Iron 28.000 MT valued at Rs. 1,86,900/- involving duty of Rs. 29,904/- was found short of book balance. Satisfactory explanation did not come forward. Thus, the demand of duty of Rs. 29,904/- was confirmed and in addition, penalty equal to the amount of duty was also imposed. Pig Iron 15.880 MT fond above book balance was confiscated being redeemed on payment of redemption fine. 9. In respect of C.I. Skull Scrap it was held that the appellant cleared 128.580 MT of C.I. Skull Scrap without payment of Central Excise Duty of Rs. 1,20,865/-. Thus, the demand of duty was confirmed under Section 11A read with Rules 9(2) & 57-I of the Central Excise Rules, 1944 (for short "the Rules, 1944") and penalty equal to the amount of duty was also imposed. However, on account of non-payment of Excise Duty on 153.360 MT of C.I. Skull Scrap, a duty to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11A of the Central Excise Act, 1944. (b) Mandatory penalty equivalent to the aforesaid amount of duty confirmed viz. Rs. 29,904/- as (a) above is imposed upon Noticee No. 1 under Section 11AC of the Central Excise Act, 1944. (c) 15.880 MT of Pig Iron found excess than that of recorded stock as on 18-8-2000 value at Rs. 1,15,924/- is ordered to be confiscated. However, I give an option to the noticee to redeem the same on payment of redemption fine of Rs. 30,000/- (Rupees Thirty thousand only). 5 (a) The demand of duty against Noticee No. 1 on 128.580 MT of CI skull scrap involving Central Excise duty of Rs. 1,20,865/- is confirmed and ordered to be recovered from Noticee No. under Section 11A of the Central Excise Act, 1944 read with Rule 9(2) and 57-I of the Central Excise Rules, 1944. (b) Mandatory penalty equivalent to the aforesaid amount i.e. Rs. 1,20,865/- is also imposed against Noticee No. 1, under Section 11AC of the Central Excise Act, 1944. 6 (a) The demand of duty against Noticee No. 1 on 153.360 MT of CI Skull Scrap valued at Rs. 7,66,800/- found short as detailed in the Panchnama dated 18-8-2000 amounting to Rs. 1,22,688/- is confirmed and is ordere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be set aside. 10... I uphold the demand of duty of Rs. 58,980/- on shortages of 6313 Nos. of C.I. sole plates and 656 Nos. of C.I. brake blocks, Rs. 10,971/- on 1203 Nos. of anchor plates found short, duty of Rs. 29,904/- , on 28 MT of pig iron found short, duty of Rs. 1,20,865/- on 128.580 MT of C.I. skull scrap found short, duty of Rs. 1,22,688/- on 153.360 C.I. skull scrap found short and duty of Rs. 599/- on back plates and clips found short. The appellants are liable to pay this amount alongwith interest. It is also seen that penalties are also imposed on the appellants under Section 11AC of the Central Excise Act as the appellants could not satisfactorily account for these shortages. Therefore, I uphold the penalties imposed under Section 11AC. However, considering the facts and circumstances of the case the penalties are reduced to Rs. 20,000/- from Rs. 58,980/-, to Rs. 4,000/- from Rs. 10,971/-, to Rs. 12,000/- from Rs. 29,904/- to Rs. 50,000/- from Rs. 1,20,865/-, to Rs. 50,000/- from Rs. 1,22,688/-, to Rs. 200/- from Rs. 599/-. The penalty imposed under Rule 173Q for excess quantities found and penalty for non-accountal of records under Rule 226 is upheld but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty for shortage of 12.12 MT was issued and as such no duty was payable, is contrary to facts and the Commissioner (Appeals) had also not recorded the fact correctly. 18. A show cause notice dated 15th February, 2001 was issued to the appellant. Additional Commissioner considered the facts and held that the stock of 56.424 MT of Pig Iron and 58.575 MT of C.I. Scull valued at Rs .3,55,471/- and Rs. 2,92,375/-, respectively, was held to be in excess of the adjusted recorded stock in form IV/RG.23 Part-I, was ordered to be confiscated under Rule 173Q(1) of the Rules, 1944 with option to be redeemed on redemption was passed. 19. It is evident from perusal of para 1.5 of the order dated 6th April, 2009 that on the basis of shortage of 12.12 MT vis-a-vis excess stock of Pig Iron and C.I. Skull Scrap a notice was issued on 15th February, 2001 for confiscation of alleged excess stock under Rule 173Q(1) of Rules, 1944 and for imposition of penalty on them under the same Rule. 20. The show cause notice dated 15th February, 2001 is a part of the record. In the said notice it is observed as under : "7. Now, therefore, M/s. Jaiswal Steel Processing Pvt. Ltd., 178B, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined under sub-section (2) of Section 11A, shall also be liable to pay a penalty equal to the duty so determined : Provided that where such duty as determined under sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined : Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account : Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act. Object behind enactment of Section 271(1)(c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C of the IT Act. 19. In Union Budget of 1996-1997, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In Para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given." 27. In Union of India v. Rajasthan Spinning and Weaving Mills [2009 (238) E.L.T. 3 (S.C.)], wherein Dharmendra Textile Processors (supra) was considered and observed as under : "32.. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short-payment of duty regardless of the conditions expressly mentioned in the section for its application. There is anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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