TMI Blog2016 (4) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... ted:- 26-11-2015 - MR. D.N. PATEL AND MR. RATNAKER BHENGRA For The Appellant : M/s Deepak Roshan For the Respondent : M/s Sumeet Gadodia, Adv., Ranjeet Kushwaha, Adv. Ashok Sinha, Adv. ORDER D.N. Patel, J. - These Tax Appeals have been preferred by the appellant against the judgment and order dated 20th February, 2007 delivered by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (Hereinafter to be referred to as CESTAT, Kolkata), whereby the appeals preferred by the respondent was allowed mainly on the ground that the case of the respondent (original petitioner) was covered by the decision rendered by Hon'ble the Supreme Court in CCE v. Orient Fabrics Pvt. Ltd. reported in (2003) 158 ELT 545 (SC)= (2004) 1 scc 597 and as there is no provision for penalty under the Automobile Cess Rules, 1984 which were enacted under Section 30 of the Industries (Development and Regulation) Act, 1951, the Penalty imposed vide Order-in-Original dated 30/31st October, 2001 under Section 173(Q) of the Central Excise Rules, 1944 is not leviable for the periods for which the penalty is imposed, i.e. from December, 1998 to December, 2001. Factual Matrix of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Rules, 1944 of equal amount. 5. It further appears from the facts of the cases that after determination of the liability of Automobile Cess the same has been paid by the respondent-assessee on 7th January, 2002, 8th January, 2002 and 5th February, 2002. The respondent-assessee challenged the Order-in-Original dated 30th/31st October, 2001 passed by the Additional Commissioner, Central Excise, Jamshedpur before the Commissioner (Appeals) Central Excise, Patna who confirmed the Order-in-Original. Thus, Order-in-Appeal was passed by the Commissioner (Appeals), Central Excise, Patna on 26th March, 2003. Thus, the penalty imposed under Rule 173(Q) of the Central Excise Rules of 1944 for non-payment of Automobile Cess was confirmed in Order-in-Appeal. 6. Being aggrieved and dissatisfied by the aforesaid order the respondent-assessee preferred an appeal before the CESTAT, Kolkata, mainly on the ground that neither there is provision for penalty under the Automobile Cess Rules, 1984 nor there is any provision for penalty under the parent Act, i.e. Industries (Development and Regulation) Act, 1951 and hence penalty cannot be imposed and levied under Section 173(Q) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade applicable both interest as well as penalty is leviable under Section 11AA and under rule 173 (Q) of the Central Excise Rules, 1944. This aspect of the matter has not been properly appreciated by the CESTAT, Kolkata and hence the order passed by the CESTAT, Kolkata allowing the appeals of the respondent deserves to be quashed and set aside. 8. It is also submitted by the counsel for the appellant that if penalty is not imposed for non-payment of the Automobile Cess then there will be no effective levy of the Automobile Cess and such matters cannot be left at the mercy of the assessee. Whenever any cess is not paid, especially under the Automobile Cess Rules, 1984, looking to Rule 3 thereof, all the provisions of the Central Excise Act and the Rules are applicable, for both payment of interest and payment of penalty and hence, the judgment and order delivered by the CESTAT, Kolkata deserves to be quashed and set aside. Counsel appearing for the appellant has relied upon the decisions rendered by Hon'ble High Court of Karnataka at Bengaluru in W.P. Nos. 51753 of 2013 and 38767-69/2014 dated 12th June, 2015 and has submitted on the basis of the aforesaid decisions that pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11AA of the Central Excise Act, 1944. These aspects of the matter have been properly appreciated by the CESTAT, Kolkata while allowing the appeals of the respondent and therefore, these appeals preferred by the appellants may not be entertained by this court. Reasons: 12. Having heard counsel for both sides and looking to the facts and circumstances of the case, we see no reason to entertain these tax appeals mainly for the following grounds: (I) While arguing this Tax appeal the following provisions of law has been read and re-read and therefore, for ready reference they are quoted as under: (a) Rule 3 of the Automobile Cess Rules, 1984, enacted under Section 30 of the Industries (Development and Regulation) Act, 1951 reads as under: 3. Application of Central Excises and Salt Act and the rules made thereunder.- Save as otherwise provided in these rules, the provisions of Central Excises and Salt Act, 1944 (1 of 1944), and the rules made thereunder including those relating to refund of duty, shall, so far as may, apply in relation to the levy and collection of the cess as they apply in relation to the levy and collection of the duty of excise on manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), (Central Excise), Patna, who decided the appeals vide order dated 26th March, 2003. Order-in-Original was confirmed in the appeals and therefore, further appeals were preferred before the CESTAT, Kolkata, who allowed the appeal preferred by the respondent and the penalty imposed by the present appellant was quashed and set aside and therefore, the Department has preferred the present appeals. (III) Looking to Rule 3 of the Automobile Cess Rules, 1984, this appellant has imposed penalty under Rule 173 (Q) of the Central Excise Rules of 1944, but, in fact there is neither provision for penalty under the Automobile Cess Rules, 1984 nor under the parental Act, i.e. Industries (Development and Regulation) Act, 1951 and therefore, it has been submitted on behalf of the appellant that there is no need for specific provision of penalty under the Automobile Cess Rules, 1984. Rule 3 of the Automobile Rules, 1984 partakes that the provisions of the Central Excise Tax Act, 1944 and the Rules made thereunder shall be applicable in relation to levy and calculation of the Cess under the Automobile Cess Rules and therefore, automatically the provision for penalty is also applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impose penalty on dealers under the Central Act in respect of tax and penalty payable under the Central Act. There is no lack of sanction for payment of tax. Any dealer who would not comply with the provisions for payment of tax would be subjected to recovery proceedings under the Public Demands Recovery Act. A penalty is a statutory liability. The Central Act contains specific provisions for penalty. Those are the only provisions for penalty available against the dealers under the Central Act. Each State Sales Tax Act contains provisions for penalties. These provisions in some cases are also for failure to submit return or failure to register. It is rightly said that those provisions cannot apply to dealers under the Central Act because the Central Act makes similar provisions. The Central Act is a self-contained code which by charging section creates liability for tax and which by other sections creates a liability for penalty and imposes penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, re-assessment, collection and enforcement of tax and penalty payable by a dealer under the Act. (Emphasis Supplied) Thus, ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944 and the Rules made thereunder. It is no longer res integra that when the breach of the provision of the Act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. The authority has to be specific and explicit and expressly provided. The Act created liability for additional duty for excise, but created no liability for any penalty. That being so, the confiscation proceedings against the respondents were unwarranted and without authority of law. 10. In Khemka Co. (Agencies) (P.) Ltd. This Court categorically laid down paras 25 and 26, which run as under:(SCC p.31) 25. Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income Tax Act, 1922 where penalty is provided for concealment of income. Penalty is in addition to the amount of income tax. This Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. (Emphasis Supplied) (VIII) Looking to Rule 3 of the Automobile Cess Rules, 1984, there is no provision for penalty at all envisaged under this Rule and as stated herein above, penalty partakes the character of additional tax, looking to the Article 265 of the Constitution of India, no tax can be levied or collected except authority of the law. Such authority has to be specific and explicit in the Acts or the Rules. The Automobile Cess Rules creates liability for the payment of automobile cess, but, it creates no liability for any penalty and hence any penalty cannot be levied under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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