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TMI Blog2015 (2) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas in the present case occurrence and detection of clandestine removal itself is after the enactment of section 11AC of the Central Excise Act, 1944? (iii) Whether the CESTAT is correct in not considering and restoring the observations of Member Technical made in the case of M/s.Sutham Nylocots - vs - CCE, Coimbatore (2003 (161) ELT 287 (Tri-Chennai) and remanding the case to original authority?" 2. The brief facts of the case are as follows: The first respondent/assessee is engaged in the manufacture of tin wires, lead plates, strips, zinc plates, strips, lead plates and strips etc. They are availing input credit under Cenvat Rules. For the wrongful availment of Cenvat credit, show cause notice was issued demanding duty, interest and penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules. 3. After taking into consideration the response filed by the assessee, the Adjudicating Authority, passed the following order: "In view of the above findings, a) I confirm the demand of Rs. 1,32,622/- (Rupees One lakh thirty two thousand six hundred and twenty two only) under Rule 57AH(2) read with proviso to section 11A of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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, the benefit of reduced penalty under the first p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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. 9. 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 levied or paid or has been short-levied or short-paid 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 pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently, 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. 12. With regard to the issue 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. 13. We also have to notice the scope of penalty under Rule 173Q of the Central Excise Rules and Section 11AC of the Central Excise Act on the basis of the decision of the Supreme Court in the case of Zunjarrao Bhikaji Nagarkar Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2) person concerned is liable to penalty. We may contrast the provisions of Rule 173Q and Section 11AC with Section 271 of the Income-tax Act, 1961."
14. In an identical circumstance, this Court, by following the above-said decision of the Supreme Court, by order dated 27.11.2014 in C.M.A.Nos.272 and 273 of 2007, dismissed the appeals filed by the assessee holding that the 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.
15. Accordingly, following the above-said decision of the Supreme Court and the decision of this Court dated 27.11.2014, we answer the first and second substantial questions of law in favour of the Revenue and against the assessee. Consequently, the third substantial question of law becomes academic.
In the result, this Civil Miscellaneous Appeals stand allowed. No costs. X X X X Extracts X X X X X X X X Extracts X X X X
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