TMI Blog2015 (2) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... ue that 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 amendment by way of introduction of Section 11AC and other provisions, there was no corresponding amendment to Rule 173Q holding that if penalty is leviable under Section 11AC, no penalty could be levied under Rule 173Q of the Central Excise Rules. Penalty under Rule 173Q of the Central Excise Rules is consequent to confiscation of goods, whereas penalty under Section 11AC of the Central Excise Act is equivalent to the duty determined. Therefore, there appears to be no mutual exclusion in relation to levy of penalty under Rule 173Q and Section 11AC. - following the decision of the Supreme Court [1999 (8) TMI 142 - SUPREME COURT OF INDIA] and the decision of this Court [2014 (12) TMI 654 - MADRAS HIGH COURT] - Decided in favour of Revenue. - Civil Miscellaneous Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghty two thousand one hundred and eighty seven only) paid by M/s.Raj Metals Alloys, against the duty confirmed above and order them to pay balance amount of ₹ 50,435/- (Rupees fifty thousand four hundred and thirty five only) immediately. c) I also impose a penalty of ₹ 1,32,622/- (Rupees One lakh thirty two thousand six hundred and twenty two only) on M/s.Raj Metals Alloys under section 11AC of Central Excise Act, 1944 and Rule 173Q of Central Excise Rules 1944. d) M/s.Raj Metals Alloys are also liable to pay interest on the duty determined under column (a) above in terms of section 11 AB read with Rule 57AH (i) after deducting the amount of ₹ 1,675/- already paid by them. 4. Aggrieved by the said order of the Adjudicating Authority, the assessee preferred an appeal before the Commissioner (Appeals), who by order dated 29.10.2003, upheld the order of the Adjudicating Authority with regard to the demand of duty, but set aside the demand of interest on the portion of the duty already paid and vacated the imposition of penalty. 5. As against the said order of the Commissioner (Appeals), the Revenue preferred an appeal before the Tribunal, which b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve also been paid within thirty days of the communication of the order by which such increase in the duty takes effect. Explanation. - For the removal of doubts, it is hereby declared that - (1) the provisions of this section which the order determining the duty under shall also apply to cases in sub-section (2) of section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President; (2) any amount paid to the credit of to the date of communication of the order referred the Central Government prior to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person. SECTION 11AB. Interest on delayed payment of duty. - (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under subsection (2), or has paid the duty under sub-section (2B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below [ten per cent.] and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolve the issue as to the mandatory nature of penalty under Section 11AC of the Central Excise Act, the Larger Bench of the Supreme Court in the case of Union of India and Others V. M/s Dharamendra Textile Processors and Others reported in 2008 (231) ELT 3 (SC) came to hold that penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion. Thus the question of law that was referred to the Larger Bench was answered holding that the decision in the case of Chairman, SEBI V. Shriram Mutual Fund reported in 2006 (5) SCC 361 is correct. In fact, in paragraph Nos.26 and 27 of the decision the Supreme Court referred to the object behind the introduction of this provision and we extract the relevant portion as such, hereunder: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration : (1) if levy of penalty under Rule 173Q was obligatory and (2) was there enough background material for the Central Government to form a prima facie opinion to proceed against the officer on the charge of misconduct on his failure to levy penalty under Rule 173Q. Appellant has contended that it is only now after insertion of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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