TMI Blog2015 (1) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... . Karuppiah,JJ. For the Appellant : Mr. S. Thirumavalavan For the Respondents : Mr. C. Saravanan JUDGMENT (Delivered by R. Sudhakar,J.) These appeals are filed by the department assailing the Final Order Nos.268-270 of 2008, dated 26.3.2008 passed by the Central Excise and Service Tax Appellate Tribunal, Chennai, by raising the following questions of law: (i)Whether the Tribunal is correct in holding that the law is settled regarding the waiver of penalty in cases involving payment of duty before issuance of show cause notice when suppression of facts with the intention to evade payment of duty has been proved beyond doubt without attributing adequate reasons substantiating the decision when the Supreme Court and also CESTAT already rendered rulings to the contrary, as in the case of Sony India Ltd., 2004 (167) ELT 385 (SC); Patiala Strips (P) Ltd, 2004 (168) ELT 267 (Tri-Del.); Deepak Spinners 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 Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the diversion of inputs on which MODVAT Credit was availed. The operative portion of the said show cause notice reads as under: 6. M/s.Premier Polytronics Ltd., are therefore directed to show cause to the Commissioner of Central Excise, 6/7, A.T.D.Street, Race Course Road, Coimbatore 18 as to why: (i)Rule 57I(i)(ii) and Rule 57U(2) (now Rule 57AH) of Central Excise Rules, 1944 read with proviso to Section 11A(1) of Central Excise Act, 1944 should not be invoked to demand the modvat credit to the tune of ₹ 26,67,927/- (Rupees Twenty Six Lakhs Sixty Seven Thousand Nine Hundred and Twenty Seven only) which has been irregularly availed for the extended period; (ii)the credit of amount of ₹ 26,52,055 should not be demanded under Rule 57I(ii) (presently Rule 57AH) of the Central Excise Rules, 1944 and the credit amount of ₹ 15,872/- should not be demanded under Rule 57U(2) (presently Rule 57AH) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944; (iii)an amount of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, referred supra. 3. We have heard the learned counsel on either side and perused the order passed by the Tribunal and the authorities below. 4. The learned Standing Counsel for the department fairly concedes that the questions of law have been wrongly framed. The issues, which are relevant for consideration in these appeals are dealt with hereunder. IMPOSITION OF MANDATORY PENALTY 5.1. The main plank of the argument advanced by the learned Standing Counsel appearing for the department is that the Tribunal erred in setting aside the penalty on the ground that mandatory penalty need not be levied if duty was paid prior to issuance of show cause notice. 5.2. To buttress the said argument, he placed reliance on the decisions of the Supreme Court in Union of India and others v. Dharamendra Textile Processors and Others, 2008 (231) ELT 3 (SC) and Union of India v. Rajasthan Spinning Weaving Mills, 2009 (238) ELT 3 (SC), wherein it has been held that once order is passed under Section 11A(2) of the 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a wrong premise. In both the appeals, therefore, the impugned orders passed by the Tribunal are set aside and the matters are remitted to the respective Tribunals for fresh consideration, in accordance with law, and in the light of this judgment.... 7.4. This issue was also considered by this Court in Commissioner of Central Excise v. Eurotherm Del India Ltd., 2014 (307) ELT 490 (Mad.), wherein it was held as under: 4. The Department's contention before the Tribunal was that whether the lower appellate authority was right in setting aside the mandatory penalty under Rule 57-1(4) of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 for the entire period subsequent to 28-9-1996. The Tribunal did not venture to examine this question but merely stated that it need not interfere with the decision of the lower appellate authority. 5. We have perused the grounds of appeal filed by the Revenue before the Tribunal, from which it is seen that the Department has contested the matter regarding imposition 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 57U of Central Excise Rules, 1944; (iii) impose a total penalty of ₹ 2,86,368/- as equal to the sum total of the above confirmed demands under Rule 57-I 57U of Central Excise Rules, 1944; (iv) impose a penalty of ₹ 25,000/- under Rule 173Q of the Central Excise Rules, 1994 on M/s.Drums and Barrels (Madras) Pvt. Limited and (v) direct the assessees to pay interest at appropriate rates as provided in the Modvat Rules. 5. While 173Q providers for discretion with the authority with regard to the quantum of penalty. In the same case, the Supreme Court observed in Paragraph 7 that, where the outer limit of penalty is fixed, which indicates the scope of discretion, Rules 57-I provides for imposition of a penalty equal to the credit so dissolved and therefore, as regards the imposition of penalty under Rule 57-I in a sum of ₹ 1,64,687/- could not have been reduced. Whereas, since the discretion is vested with the authority to reduce the penalty under Section 173Q, that is not interfered with. The civil miscellaneous appeal is allowed to the extent indicated above. 7.6. In the light of the law enunciated in the decisions referred supra, the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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