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Shri Ghanshyamdas C. Goyal Versus Commissioner of Central Excise, Aurangabad

2015 (4) TMI 995 - CESTAT MUMBAI

Imposition of penalty - Whether the penalty under Rule 26 on the co-appellant can be waived if main appellant against whom duty interest and penalty has been confirmed, has paid duty, interest and 25% penalty in terms of proviso to Section 11A(2) - Held that:- Immunity provided under the proviso is available to only those persons to whom the notice is issued under Section 11A(1A). In the present case penalty on the appellant was proposed in the notice and imposed in the impugned order under Rule .....

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der Section11A(1A) and duty interest and 25% of penalty proposed in the show cause notice is paid by both the person then against those both the persons proceedings will stand concluded, but if any other person on whom only penalty under Rule 26 of Central Excise Rules, 2002, or any other person is proposed then the proviso to Section 11A(2) is not applicable - However, considering the fact that total amount of duty confirmed is ₹ 2,79,803/- and also on the fact that entire duty, interest .....

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dent : Shri Ashutosh Nath, Asst Commissioner (AR) ORDER Per: Ramesh Nair: This appeal is directed against Order-in-Appeal No. AV.(199-200) 180-181/2013 dtd. 18/7/2013 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad, wherein the Ld. Commissioner (Appeals) upheld the imposition of penalty of ₹ 50,000/- on the appellant under Rule 26 of the Central Excise Rules, 2002. The issue involved in this case is whether the penalty under Rule 26 on the co-appellant can .....

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ver of penalty imposed under Rule 26 of the Central Excise Rules, 2002 on the ground that in terms of proviso to Section 11A(2) , if the main appellant discharged the liability of Excise duty, interest and 25% penalty then other matter of other appellant should also stand concluded. He submits that appellant as co-appellant was imposed penalty of ₹ 50,000/- under Rule 26 whereas the immunity is granted to only those other persons, who have issued notice under Section 11A(1) therefore the i .....

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inst whom the excise duty demand was raised, paid the duty, interest and 25% of penalty, whether in terms of proviso to Section 11A(2), the co-appellant can be exonerated from penalty imposed under Rule 26 of Central Excise Rules, 2002. In this regard I have read proviso to Section 11A(2) which is reproduced below:- [Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom .....

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erefore the appellant is not covered under the category of the "other persons" as mentioned, under the proviso. Therefore in my view the immunity provided under the proviso is not applicable to the present appellant. From the said proviso, I am of the opinion that the term "person" and "any other persons" used in the proviso under Section 11A(2) means if in any case in the common show cause notice, if the duty demand was raised against more than one person under Sec .....

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squarely applicable in the present case. The relevant portion of the decision is reproduced below: 3 . After hearing the other sides, I find that the moot question required to be decided in the present appeals filed by the Revenue is as to whether the respondents would get the benefit of provisions of section 11A(2) when the main manufacturer discharges his duty liability along with interest and 25% of penalty. For appreciating the said provisions the same are being reproduced below :- "SEC .....

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s Act or the rules made thereunder], a Central Excise Officer may, within [one year] from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to who cause why he should not pay the amount specified in the notice. [(1A). When any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, by .....

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n the notice or the duty so accepted by such person within thirty day of the receipt of the notice.] (2) The [Central Excise Officer] shall after considering the representation, if any, made by the person on whom notice is served under sub-section (1) determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. [Provided that if such person has paid the duty in full together w .....

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partly due from such person.]" 4. Sub-section 1 of section 11 provides for issuance of show cause notice demanding short paid or non-paid duty within the period of either one year from the relevant date or five years where there is misstatement of suppression of facts. Subsection 1A which was introduced w.e.f. 13.07.06 gives the option to person to whom the notice is served under the proviso to sub-section 1 by Central Excise officer to pay duty in full or in part along with interest and p .....

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ng of sub-section 1A, sub-section 2 and proviso to sub-section 2 of section 11 makes it very clear that the said provisions are applicable in respect of persons to whom notice stands issued under subsection 1 of section 11A. Notice under sub-section 1 of section 11A is issued to a person who has either not paid the duty or short paid the duty. As such notice to sub-section 1 of section 11 is issued to a manufacturing unit or a person who is required to pay duty but has not paid the duty. Notice .....

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been served under sub-section 1 of section 11 and who have paid the duty along with interest and 25% of penalty within a period of 30 days of receipt of the notice. Accordingly, it has to be concluded that the proceedings do not come to an end in respect of all the persons in as much as the expression used in the said proviso is only in respect of such persons and not all the notices. 6. I also find that the proviso to section 2 also refers to the other persons. As such it has to be seen as to .....

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sub-section 1 of section 11A. As already observed, notices under sub-section 1 of section 11A are served only to those persons who are required to pay duty and have either not paid duty or short paid. Notices under sub-section 1 are not to be issued to other persons who may be employees of the manufacturing unit. As such analyzing the proviso to sub-section 2 of section 11A, it becomes clear that the proceedings are deemed to be conclusive only in respect of such person who discharges his duty l .....

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or purchasing, or in any other manner deals with any excisable goods which he knows or has been reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or "[(two thousand rupees], whichever is greater." 8. As is seen from the above, the invocation of penal provision of Rule 26 is dependent upon so many factors which are unconnected with the provisions of section 11A. No doubt a combined show cause not .....

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turer. The said proviso in my views, only concludes the proceedings in respect of the persons against whom notice under section 11A is issued and who have deposited the duty in terms of provisions of sub-section 1A of section 11A. As such I agree with the Revenue that payment of short paid and non-paid duty by the main manufacturer would not result in conclusion of proceedings against all other persons on whom penalty stands proposed to be imposed in terms of Rule 26. If the legislative intent w .....

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c. along with interest and 25% of the duty amount as penalty within 30 days of the receipt of the show cause notice thereby dispensing with the rigours of adjudication procedure. This is an additional facility given to the Trade to settle the dispute at an early stage to reduce litigation and also aid in collection of tax dues more expeditiously. The scheme is optional and not compulsory. The assessee has the further option of using the proposal facility in full or in part. In case of part payme .....

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