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THE COMMISSIONER OF CENTRAL EXCISE Versus M/s. TATA MOTORS LTD.

2016 (4) TMI 840 - JHARKHAND HIGH COURT

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 Rules, 1984, there is no provision for penalty at all envisaged under this R .....

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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 Appellate Tribunal, Kolkata (Hereinafter to be referred to as CESTAT, Kolkata .....

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-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 make the payment of Automobile Cess. 3. As the aforesaid Automobile Cess .....

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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 to December, 2001 424 Nos. ₹ 3,55,879.78 4. These Notices were repli .....

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r 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 C .....

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rent 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 Maharashtra [1975] 2 SCC 22 and the CESTAT, Kolkata allowed the appeals preferred by .....

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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 Industries (Development and Regulation) Act, 1951 the provisions of the Centra .....

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herefore, 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 case, i.e. to the non-payment of Automobile Cess and once the Central Excise .....

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en 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 .....

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mmitted 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, 1984 nor under the Parental Act, i.e. under the Industries (Development a .....

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rental 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 Central Excise [Civil Appeal Nos. 2714-16 of 1981, dated 3-12-1991]. On th .....

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he 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 looking to the facts and circumstances of the case, we see no reason to e .....

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entral 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 applicable during the relevant period reads as under: 11AA. Interest on delay .....

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ediately 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 Rules, 1944 reads as under :- Rule [173 Q. Confiscation and penalty.- (1) .....

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se(bb) or clause (c) or clause (d) has been committed, or five thousand rupees, whichever is greater………………………………………………………………… ………………………………………………………………&hellip .....

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he 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 penalty was under challenge by way of appeals preferred before the Commissioner .....

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ty 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 .....

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ax 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 happened in Abraham's case (supra). Penalty is within assessment proceedi .....

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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 must provide for assessment. Third, the Act must provide for enforcement of .....

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ing 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 liability. The Central Act contains specific provisions for penalty. Those .....

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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 to the assessment. In fact, penalty is an addition to the tax and additio .....

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3 (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 30/31 October, 2001, i.e. after order-in-Original was passed by the Additiona .....

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s.- (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 shows that the breach of the provision of the Act has not been made penal o .....

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evied 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. .....

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racter 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 and penalty in the State Act does not mean that the provision for penalty .....

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ecause 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 under: "8. Under the Act penalty may be imposed for failure to register .....

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