TMI Blog2015 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11AC and interest under Section 11AB only on the demand amount covered for the period from 28.9.1996. As held by the apex court in the case of UOI Vs Dharmendra Textile Processors once mens rea with intention to evade payment of duty is established, appellants are liable for mandatory penalty and interest under Section 11AB. - Following decision of Arun Vyapar Udyog Pvt. Ltd. [2013 (12) TMI 817 - MADRAS HIGH COURT] - demands confirmed by the Lower Authority is liable to be upheld and the appellants are liable for penalty under Section 11AC and liable for interest under Section 11AB and under Rule 57 U (6) and Rule 57U (8) of CER prospectively for the demand amount covered from 28.9.96. Whether the amended provisions of Section 11AC of the Act for availing 25% penalty is applicable to the present case. - Held that:- There is no evidence to show that payment of Section 11AB interest as well as interest demanded under Rule 57U(8) of CER and reduced penalty paid before 30 days of receipt of adjudication order. Therefore, the adjudicating authority in the impugned order confirming the demand and imposing penalty under Section 11AC and demanding interest under Section 11AB and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules. 3. Aggrieved by the aforesaid order, appellant preferred appeal before this Tribunal. The Division Bench of this Tribunal vide Final Order No.1094/2006 dt. 15.11.2006 upheld the demand and set aside the penalties imposed under Section 11AC, 57U and 173Q and also set aside the interest demanded under Section 11AB and under Rule 57U (8) as no penalty can be imposed for the period prior to 28.9.96, the date on which Section 11AC came into force. 4. Aggrieved by the Tribunal's order, Revenue filed C.M.A before the Hon'ble High Court of Madras and the Hon'ble Court vide Order dt.11.9.2009 in C.M.A.No.1370/2007 set aside the Tribunal's order dt. 15.11.2006 and remitted back the matter to the Tribunal. 5. Heard both sides. 6. Ld. Advocate for the appellant submits that they have paid the entire duty amount and also reversed the credit on the capital goods before issue of show cause notice. On the 11AC penalty, he submits that immediately on receipt of the Hon'ble High Court's order dt. 11.9.2009 they have paid a sum of ₹ 2,79,017/- towards 25% of the total penalty of ₹ 11,16,069/- within 30 days of receipt of Hon'ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside this Tribunal's Final Order No.1094/2006 dt. 15.11.2006 and remanded to the Tribunal to consider the penalty imposed under Section 11AC and Rule 57U and the interest demanded under Section 11AB in the light of Hon'ble Apex Court's judgement in CCE Vs SKF India Ltd. 2009 (239) ELT 385 (SC) as the adjudicating authority has imposed penalty under Section 11AC and under Rule 57U only for the period from 28.9.96 when the provisions of Section 11AC came into effect. The relevant paragraph of the Hon'ble High Court's order is reproduced as under :- 4. Again, the Supreme Court explained the legal position in the case of Commissioner of Central Excise, Pune v SKF India Ltd. (2009 (239) ELT 385) by referring to Section 11A, 11AA, 11AB and 11AC. The Apex Court observed that if the object of the law is to state clearly and unambiguously the obligations of the person whom the law addresses and to spell out plainly and without any confusion the consequences of failure to discharge the obligations cast by the law, then the four sections of the Act fall miles short of the desired objective. Even as originally cast, the provisions were for from very happily framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provision of sub-section (2B) of Section 11A of the Act. 5. Having regard to the submission made and also in view of the decision of the Supreme Court cited above, the order of the Tribunal set aside and the matter is remitted back for the Tribunal to consider the issue in the light of the above cited Judgment of the Supreme Court. 9. On perusal of the records and the impugned order, I find that the adjudicating authority confirmed the demand of excise duty of ₹ 15,53,996/- and reversal of credit of ₹ 1,71,901/- but restricted the penalty to ₹ 8,52,254/- and ₹ 1,63,850/- under Section 11AC equivalent to the duty payable after 28.9.96. On perusal of the SCN dt. 19.4.99, it is seen that the Department initiated detailed investigations on 3.3.1999 and recorded statements and detected non-payment of excise duty on scrap cleared from the job worker premises and also detected clearance of capital goods without reversal of credit during the period 1994-95 to 1998-99. The suppression of facts with deliberate intention to evade payment of duty has been clearly brought out in the findings of the adjudication order. It is evident from the records that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsignment agents and the Director of the Company admitted the liability and accepted to pay the differential duty. The Original Authority after considering the materials placed before him pointed out that as declared in the invoices that the removals specified in the notice are towards consignment agents, the responsibility of paying differential duty lies with the noticee. The Original Authority further pointed out that when the appellant was conscious of the notional value for sale towards consignment agent, the responsibility of paying differential duty is rest on the appellant. More so, when they had earlier been paying differential duty for such consignment sales, the plea of the assessee was liable to be rejected. Admittedly, the matter would not have come to light but for the surprise inspection done by the Enforcement Wing of the respondent Department. If it was a genuine case where the appellant could not remit the differential duty on account of delay in receipt of sale patties, as soon as they have been received they ought to have remitted the differential duty. But that was not done and they intentionally withheld payment of differential duty for the subsequent period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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. Subsequently, Section 11AC aas amended by the Finance Act, 2000 w.e.f. 12.5.2000 which reads as under :- Section 11AC. Penalty for short-levy or non-levy of duty in certain cases. 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 penalty equal to the duty so determined : Provided that where such duty as determined under sub-section (20 of section 11A, and the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas in the present case, the appellants have not complied the provisions of Section 11AC as they have not paid the interest demanded under Section 11AB and the reduced penalty within 30 days of the communication of the adjudication order. Appellant's case is not covered under 3rd proviso of Section 11AC as this is not the case when the Tribunal or Hon'ble High court reduced or enhanced the penalty. The Hon'ble High Court in their order dt.11.9.2009 has set aside the order of Tribunal and remanded the case to the Tribunal. The letter dt. 19.11.2009 addressed to Superintendent of Central Excise Range informing that they have remitted ₹ 2,79,017/- towards 25% of total penalty under Section 11AC under protest after receipt of Hon'ble High Court order is not acceptable. Appellants relied the Hon'ble High Court order in the case of Audco India Ltd. Vs CCE (supra), CCE Chennai Vs Motherson Sumi Systems Ltd. (supra) and Hon'ble Gujarat High Court decision in CCE ST Vapi Vs Union Quality Plastics (supra) and the Tribunal's decision. In the above case laws, the Hon'ble High Court's and Tribunal extended the reduced penalty of 25% under Section 11AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature specifically fixes the time-limit within which the duty with interest and penalty at 25% is to be paid for availing the incentive, it would neither be open to the appellate authority nor any other authority to permit the assessee to pay 25% penalty at any time other than the time prescribed under Section 11AC. 26.?By comparing Section 11AB with Section 11A(2B) and (2C) and also by referring to Section 11AC as substituted with effect from 8th April, 2011, it was contended by the counsel for the assessee that it was never the intention of the legislature to levy 100% penalty under Section 11AC. We see no merit in the above contention because, firstly sub-section (2B) and (2C) to Section 11A are applicable to cases not involving fraud, collusion, suppression of facts etc, whereas Section 11AC applies to cases where there is intention to evade payment of duty on account of fraud, collusion or any wilful mis-statement or suppression of facts etc. Secondly, to attract Section 11AC criminal Intent or mens rea is a necessary constituent, whereas, under Section 11A, the criminal intent or mens rea is not the necessary constituent. Therefore, the provisions of Section 11AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in dispute. It is also not in dispute that the assessee has paid the duty sought to be evaded as also the interest payable thereon under Section 11AB before the passing of the adjudication order. Admittedly, the assessee has not paid 25% of the penalty imposed under Section 11AC within thirty days from the date of the communication of the order of Central Excise Officer determining the duty sought to be evaded under Section 11A(2) of the Act which is the mandatory requirement under Section 11AC. Instead of paying 25% of the penalty within the stipulated time, the assessee has chosen to file an appeal against imposition of penalty under Section 11AC and the Tribunal has permitted the assessee to pay 25% penalty beyond the time prescribed under the proviso to Section 11AC which is not permissible in law. The above Hon'ble High Court's order is squarely applicable to the present case. There is no evidence to show that payment of Section 11AB interest as well as interest demanded under Rule 57U(8) of CER and reduced penalty paid before 30 days of receipt of adjudication order. Therefore, the adjudicating authority in the impugned order confirming the demand and impos ..... 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