TMI Blog2014 (12) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of penalty, against which the Department has not filed any appeal. - Decided against the assessee. Levy of interest - Section 11AB - Held that:- Appellant contended that Section 11AB could not be invoked for the period prior to the enactment of Finance Bill, 2001, to mean thereby, prior to 2001, Section 11AB was not applicable. The provisions of Section 11AB of the Central Excise Act came into effect from 28.9.1996 by Finance (No.2) Act, 1996. No doubt that in the year 2001, there is a change in the rate of interest from 11.5.2001 from 10% - 36% to 18% - 36% that is irrelevant. Therefore, the plea of the appellants that the Tribunal ought not to have been imposed interest under Section 11AB of the Central Excise Act is misconceived. - Decided against the assessee. once Penalty is imposed under Rule 173Q of the Central Excise Rules, no penalty could be imposed under Section 11AC of the Central Excise Act, when Section 11AC was introduced by Finance (No.2) Act, 1996 with effect from 28.9.1996, there is no bar in Section 11AC of the Central Excise Act to impose of penalty under Rule 173Q of the Central Excise Rules. Nevertheless, when Finance (No.2) Act 1996 brought in amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27.11.2014. This Court also observed that in the meanwhile, if the counsel is able to file vakalat, he is entitled to pursue the matter or otherwise the Court will decide the matter based on the relevant records. Today (27.11.2014), when the matter was called, none appears for the appellant and the above-said counsel has not filed vakalat so far. Hence, after hearing the learned standing counsel appearing for the Department and after perusing the materials placed on record, we pass the following order. 3. The appellants are engaged in the manufacture of Dextrine and other modified starches, classifiable under Chapter heading 3505.20 and starch, classifiable under Chapter heading 1103.10 of Central Excise Tariff Act, 1985. They cleared their goods from their factory on their own account and also on job work basis to their two related trading concerns without bringing into the knowledge of the Department, without taking out registration, without following the procedure and without payment of duty in contravention of Rules 9(1), 52A, 173B, 173C, 173F, 173G and 226 of the Central Excise Rules, 1944 read with Section 6 of the Central Excise Act, 1944. Hence show cause notices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from M/s.Indo Chem Co. for the clearances effected during the period from 1995-96 to 1999-2000 and covered under show cause notice vide C.No.V/35/15/131/2000 Cx.Adj. dated 25.10.2000 under Rule 9(2) of the erstwhile Central Excise Rules, 1944 read with Section 11A(2) of the Central Excise Act, 1944 read with Section 38A of the Central Excise Act, 1944. (ii) I appropriate a sum of ₹ 77,814/- already paid in this regard by the noticee vide TRS challan No.1 dated 11.10.2001 towards discharge of duty liability on modified starch cleared during the years 1996-97 to 1997-98. I also appropriate an amount of ₹ 2,52,303/- from the Bank Guarantee of ₹ 9,76,290/- (Dena Bank) furnished as security in connection with execution of B11 Bond, towards the above duty liability. (iv) I impose a penalty of ₹ 30,000/- (Rupees thirty thousand only) on M/s.Indo Chem Co. under Rule 173 Q and 226 of the Erstwhile Central Excise Rules, 1944 for the contravention of Rules 9(1), 52A, 173B, 173C, 173F, 173G and 226 of the erstwhile Central Excise Rules, 1944, Rule 25 of the Central Excise Rules, 2002 read with Section 38A of the Central Excise Act, 1944. (v) I also impose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or paid or has been short-levied or shortpaid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orty-five days from the date of issue of such order, instruction or direction, as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid. (2) The provisions of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. Explanation 1. - Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal, National Tax Tribunal or, as the case may be, the court, the interest shall be payable on such reduced amount of duty. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal, National Tax Tribunal or, as the case may be, the court, the interest shall be payable on such increased or further increased amount of duty. 10. Section 11AC of the Central Excise Act was introduced by Finance (No.2) Act, 1996 with effect from 28.9.1996. Section 11AC of the Central Excise Act gets attracted where any duty of excise has not been le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3398-99 of 2003, 4096 of 2004, 4316 of 2007, 4317 of 2007, 5277 of 2006, 675 of 2007, 1420 of 2007 and appeal relating to SLP (C ) No.21751 of 2007 are allowed and the excepted appeals shall now be placed before the Division Bench for disposal. 12. This decision was rendered by the Supreme Court on 29.9.2008. At the time of admission of these appeals, this Court did not have the benefit of this decision. Apparently, the Tribunal was also deciding the issue on the basis of law that was prevailing at that point of time and the various Tribunals took a view that the element of discretion was available while imposing penalty under Section 11AC of the Central Excise Act. Since that issue stands resolved by the Larger Bench of the Supreme Court, the first substantial question of law admitted by this Court does not bear any significance, since the levy of penalty under Section 11AC, has therefore become mandatory, nevertheless, the Tribunal has chosen to impose lesser amount of penalty, against which the Department has not filed any appeal. 13. The assessees/appellants are before us contending that no penalty could be imposed. However, as the position now stands resolved in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 11AC in the Act that levy of penalty has become mandatory and that it was not so under Rule 173Q. This contention does not appear to be correct. In both Rule 173Q and Section 11AC the language is somewhat similar. Under Rule 173Q such goods shall be liable to confiscation and the person concerned shall be liable to penalty not exceeding three times the value of excisable goods or five thousand rupees whichever is greater. Under Section 11AC the person, who is liable to pay duty on the excisable goods as determined shall also be liable to pay penalty equal to the duty so determined . What is the significance of the word liable used both in Rule 173Q and Section 11AC? Under Rule 173Q apart from confiscation of the goods the person concerned is liable to penalty. Under Section 11AC the word also has been used but that does not appear to be quite material in interpreting the word liable and if liability to pay penalty has to be fixed by the adjudicating authority. The word liable in the Concise Oxford Dictionary means, legally bound, subject to a tax or penalty, under an obligation . In Black s Law Dictionary (sixth edition), the word liable means, bound or obliged in law or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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