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2016 (4) TMI 840 - JHARKHAND HIGH COURT

2016 (4) TMI 840 - JHARKHAND HIGH COURT - 2016 (336) E.L.T. 208 (Jhar.) - Penalty - whether 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 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? - Held that:- Looking to Rule 3 of the Automobile Cess Ru .....

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ot be levied under Section 173 (Q) of the The Central Excise Act, 1944. - Tax Appeal No. 62, 63, 64, 65, 66, 67, 68 of 2007 - Dated:- 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 App .....

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ies (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 case 2. The respondent is a manufacturer of Tractor. Under the Automobile Cess Rules, 1984 enacted under Section 30 of Industries (Development and Regulation) Act, 1951, the respondent was liable to .....

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, 99 203 No.s ₹ 1,53,188.64 3. SCN/Telco-1/5-11A/200 0/400 dated 04.04.2000 October, 99 to February, 2000 201 Nos. ₹ 1,61,046.03 4. SCN/Telco-1/14-11A/20 00/965 dated 25.08.2000 March, 2000 to July, 2000 440 Nos. ₹ 3,41,807.71 5. SCN/Telco-1/5-11A/200 1/291 dated 19.03.2001 August 2000 to February, 2001 596 Nos. ₹ 4,76,355.00 6. SCN/Telco-1/1/2002/71 dated 22.01.2002 March 2001 to June, 2001 268 Nos. ₹ 2,21,406.60 7. SCN/Telco-1/1/2002/73 dated 22.01.2002 July 2001 .....

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ule 173(Q) of 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 .....

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obile 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) of the Central Excise Rules of 1944 and the respondent-Assessee has relied upon the decision rendered by Hon'ble the Supreme Court in Orient Fabrics (P.) Ltd. (supra) and has also relied upon the decision rendered by the Hon'ble Supreme Court in Khemka & Co. v. State of Maharashtr .....

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7. Counsel appearing for the appellant vehemently submitted that no error has been committed by the appellant in imposing the penalty under Section 173 (Q) of the Central Excise Rules, 1944 because under Rule 3 of the Automobile Cess Rules, 1984 the provisions of Central Excise Act, 1944 and the Rules made thereunder are applicable to the levy and collection of Automobile Cess. Thus, if there is non-payment of Automobile Cess under Automobile Cess Rules,1984 enacted under Section 30 of the Indu .....

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cable to the present case because that was a case of Additional Duty and therefore, further payment of Additional Duty was not allowed by the Hon'ble Supreme Court whereas, in the facts of the present case, Automobile Cess is not at all Additional duty and therefore, non-payment of Automobile Cess will be covered by the Rule 3 of the Automobile Cess Rules, 1984 and therefore, provisions of the Central Excise Act and the Rules made thereunder shall be applicable to the facts of the present ca .....

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t 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 dese .....

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t is submitted by the counsel for the respondent that no error has been committed by the CESTAT, Kolkata in allowing the appeals preferred by the respondent. It is submitted by the counsel for the respondent that the penalty is not incidental to the assessment nor it is a mere consequence of the assessment. Penalty is an addition to the tax or is an addition to the liability and therefore, there must be a provision for penalty and there is no provision of penalty under the Automobile Cess Rules, .....

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erned there bound to be specific provision under the rules or under the parental Act and if there is no specific provision for imposition of penalty, the same cannot be imposed by the appellant under Rule 173 (Q) of the Central Excise Rules, 1944. 11. Counsel appearing for the respondent has relied upon the decision rendered by Hon'ble the Supreme Court in Khemka & Co. (supra) as well as the judgment rendered by Hon'ble the Supreme Court in Barnagore Jute Factory Co. v. Inspector of .....

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ade on 7th, 8th January, 2001 and on 5th February, 2001, which is within the period of three months from the date of adjudication and hence any interest is also not leviable under Section 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 .....

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hereunder.- 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 manufacture of automobiles under the Act and the Rules. (Emphasis Supplied) (b) Relevant part of Section 11AA of the Central Excise Act, 1944 is app .....

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nt, by notification in the Official Gazette on such duty from the date immediately after the expiry of the said period of three months till them date of payment of such duty…………………… ……………………………………………………………….….. (Emphasis Supplied) (c) Rule 173 (Q) of the Central Excise .....

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ention of the nature referred to in clause (a) or *** [clause (b), or clause(bb) or clause (c) or clause (d) has been committed, or five thousand rupees, whichever is greater………………………………………………………………… ………………………………………&hell .....

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, for different period notices were issued. In all the aforesaid appeals the periods involved are from December, 1998 to December, 2001. Thereafter, Order-in-Original was passed on 30/31st October, 2001 by the Additional Commissioner, Central Excise, Jamshedpur, who directed for payment of Automobile Cess and penalty under Rule 173 (Q) of the Central Excise Rules, 1944. This Automobile Cess was paid by the respondent on 7th January, 8th January and 5th February, 2002, but the imposition of penal .....

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ule 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, 198 .....

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imposes penalty under Sections 270 and 271. These sections in the Income Tax Act provide for imposition of penalty on contumacious or fraudulent assessee. Penalty is in addition to income tax, if any, determined as payable by the assessee. Tax and penalty like tax and interest are distinct and different concepts under the Indian Income Tax Act. The word "assessment" could cover penalty proceedings if it is used to denote the whole procedure for imposing liability on the taxpayer as hap .....

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penalty is provided for concealment of income. Penalty is in addition to the amount of income-tax. This Court in Jain Brothers v. Union of India said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax. 26. The Federal Court in Chatturam v. C.I.T., Bihar said that liability does not depend on assessment. There must be a charging section to create liability. There must be first a liability created by the Act. Second, the Act m .....

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g reasons we are of the opinion that the provisions in the State Act imposing penalty for non-payment of income-tax within the prescribed time is not attracted to 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 l .....

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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, tax and penalty like tax and interest are distinct and different. Penalty is neither merely incidental to the assessment nor it is merely consequent .....

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Regulation) Act, 1951 and hence penalty cannot be imposed under Section 173 (Q) of the Central Excise Rules, 1944. (IV) There is already a provision for the payment of interest under Section 11AA of the Central Excise Act, 1944, as was prevailing at the relevant time if the duty is not paid within a period of three months after the assessment the interest, minimum at the rate of 10 % and maximum at the rate of 36%. As stated herein above, after adjudication of the liability after order dated 30/ .....

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and which runs as under: "3. Levy and collection of additional duties.- (1)-(2) * * * (3) The provisions of the Central Excises and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection the duties of excise on the goods specified in sub-section(1)." 6. A perusal of the said provision s .....

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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 2 .....

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ontinuation of assessment proceedings and that penalty partakes of the character of additional tax. 26. The Federal Court in Chatturam v. CIT said that liability does not depend on assessment. There must be charging Section to create liability. There must be first a liability created by the Act. Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax .....

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Rule 3 of the Rule of 1984 cannot be operated for imposition of penalty because penalty partakes the character of additional tax. Penalty is not incidental to the process of assessment. It is in fact additional statutory liability and unless there is specific provision for penalty, the same cannot be inferred from Rule 3 of the Automobile Cess Rule, 1984. (VII) It has been held by the Hon'ble Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1962] 2 SCC 627 in paragraph No. 8 as und .....

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