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TMI Blog2015 (1) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... inners Ltd., 2005 (179) ELT 93 (Tri-Del.); Diamond Industries, 2006 (195) ELT 236 (Tri-Del.) and Parmarth Steel & Alloys (P) Ltd., 2007 (78) RLT 249 (CESTAT-Del.)? (ii)Whether the Tribunal is correct in waiving the penalty imposed under Section 11AC of the Central Excise Act and demand of interest under Section 11AB of the Central Excise Act by the Commissioner on the basis of settled law on the impugned case involving suppression of facts with intention to evade payment of duty when legislature's intention is to the contrary by virtue of explanation to Section 11A(2B) of the Central Excise Act, 1944? 2.1. The facts in a nutshell are as under: The first respondent/ assessee is a manufacturer of various items of Auxillary Textile Machines and they were availing MODVAT Credit attributable to the inputs. 2.2. During the course of verification of accounts of the assessee, it was noticed that some of the inputs and capital goods purchased by the assessee, on which MODVAT Credit was availed, were diverted for use in the Research and Development Section, Service Station and Field Service, etc., without reversing the credits during the period from April, 1995 to March, 2000. The tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Section 11A of the Central Excise Act, 1944; (iii)an amount of Rs. 24,27,393/- which has already been paid by the assessees as explained above should not be appropriated towards the above demands; (iv)a penalty should not be imposed on them under Rule 57I(4) (now Rule 57AH) and 57U(6) (now Rule 57AH) of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944 and under Rule 173Q of the Central Excise Rules, 1944 for the above said contraventions; (v)interest should not be demanded on delayed payment of duty under Rule 57I(3), Rule 57U(8) (presently Rule 57AH) read with Section 11AB of the Central Excise Act, 1944. 2.7. After considering the reply submitted by the assessee, the Commissioner of Central Excise, by order dated 8.11.2001 held as under: "1. I disallow the credit and demand the equivalent credit amount of Rs. 26,52,055/- (Rs. Twenty Six Lakhs Fifty Two Thousand and Fifty Five only) under Rule 57I(i)(iii)/57AH(2) of the Central Excise Rules, 1944 and the credit of Rs. 15,872/- (Fifteen Thousand Eight Hundred and Seventy Two only) under Rule 57U(3) of Central Excise Rules, 1944/57AH(2) as revalidated under Section 38A of the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Act, invocation of Section 11AC of the Central Excise Act is automatic and no discretion is vested on the authorities to reduce penalty. 6. Per contra, the learned counsel for the first respondent pleaded that there are certain periods during which penalty proceedings cannot be initiated in view of Notification No.14/96-CE (NT), dated 23.7.1996. 7.1. The said issue now stands resolved by a Larger Bench decision of the Supreme Court in Union of India and others v. Dharamendra Textile Processors and Others, 2008 (231) ELT 3 (SC), wherein it was held that penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion. The relevant portion of the said decision reads as under: "26. In Union Budget of 1996-97, 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. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposition of penalty prior to the date of introduction of the said provision, viz., 57-1(4) of the Central Excise Rules, 1944 and thereafter. Therefore, the Revenue having raised such a ground before the Tribunal, the Tribunal ought to have considered the issue and rendered a finding. Without doing so, the Tribunal merely observed that they need not interfere with the decision of the lower appellate authority as regards the penalty for the brief period from 23-7-1996 to 28-9-1996 when the contention of the Department that post 28-9-1996 also the Department was entitled to levy penalty and that the period covered for adjudication was from 1-4-1994 to 30-9-1998. Hence, this question requires consideration of the Tribunal. 6. Accordingly, the matter is remitted back to the Tribunal directing it to consider the question of levy of penalty under Rule 57-1(4) of the Central Excise Rules, 1944 for the period post 23-7-1996 in accordance with law after giving opportunity to both sides. 7.5. Following the decision of the Supreme Court in Dharamendra Textile Processors and others, referred supra, this Court in Commissioner of Central Excise v. Drums and Barrels Madras Pvt. Ltd., 2012 (275) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent indicated above. 7.6. In the light of the law enunciated in the decisions referred supra, the decision of the Tribunal holding that mandatory penalty is not leviable cannot be accepted and accordingly set aside and the matter is remanded to the Tribunal to reconsider this issue afresh in the light of the decisions referred supra and Notification No.14/96-CE (NT), dated 23.7.1996. REFUND CLAIMS NON SPEAKING ORDER 8. The next plea raised by the learned Standing Counsel appearing for the department is that the Tribunal by a non speaking order has dismissed their appeals challenging the partial grant of refund claims by the Deputy Commissioner in favour of the assessee. 9.1. It is seen from the records that the Deputy Commissioner on 30.6.2000 and 27.7.2000 partially rejected the refund claims made by the assessee. Assailing the said orders passed by the Deputy Commissioner, the assessee preferred two appeals and the department also preferred two appeals before the Commissioner of Central Excise (Appeals). The Commissioner of Central Excise (Appeals), by orders dated 28.2.2002 and 1.3.2002, allowed the appeals filed by the assessee and dismissed the appeals preferred by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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