TMI Blog2016 (12) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... the application of section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of section 11AC - we see no reason to overturn or reverse the view taken by the tribunal. The view taken in its order passed and in the year 2005 cannot be said to be perverse or vitiated by any error of law apparent on the face of the record. Appeal dismissed - decided against appellant-Revenue. - Central Excise Appeal No. 32 of 2006 - - - Dated:- 5-12-2016 - S. C. Dharmadhikari And B. P. Colabawalla, JJ. Mr. M. M. Dwivedi with Mr. Joel Carlos for the appellant Mr. M. H. Patil with Ms. Aparna Hirandagi for the respondent ORDER P. C. 1. This appeal was placed for directions in order to ascertain as to whether the substantial questions of law, on which it was admitted and entertained, are covered by any judgment of a higher court. This was necessary to be ascertained because the tribunal followed a larger Bench decision in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der-in-original) on 23rd June, 1998. 11. Aggrieved by the order passed by the Commissioner, the respondent/assessee approached the tribunal. 12. The tribunal concluded that having paid the duty and there being no element of any willful mis-statement or suppression of facts that the interest and penalty were not recoverable. The show cause notice and the adjudication order was quashed. 13. This appeal was admitted on the substantial questions of law and formulated in the order of admission. 14. The learned counsel appearing for the Revenue would submit that the tribunal's findings cannot be sustained in law. It is submitted that the tribunal should not have condoned the lapses on the part of the assessee. The condonation of these lapses would seriously jeopardise the interest of the Revenue. The mandatory interest and penalty could not have been waived given the clear language of the statute. Reliance is placed on the judgment of the Hon'ble Supreme Court of India in the case of Union of India vs. Dharamendra Textile Processors (supra). 15. On the other hand, Mr. Patil appearing for the assessee would submit that the provisions of section 11AB and 11AC are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of three years. 17. It is this finding of fact which was challenged by the assessee before the tribunal. The tribunal found that at the time of clearance from the factory, the assessee was not aware of the end use of the product. It was discovered that 95% of the clearances were meant for domestic customers and that is how the matter was approached by the assessee. When the matter was pending before the Commissioner, the assessee came forward with a suggestion that they would make payment of differential duty after the actual sale for non-domestic purposes takes place. That is how the differential duty was paid. 18. The contest before the tribunal was, therefore, restricted to the applicability of the provisions then prevailing, namely, section 11AB enabling recovery of interest and section 11AC enabling recovery of penalty. As far as this aspect of recovery of interest and the recovery of penalty is concerned, the argument is that both were leviable. 19. In the case of Dharamendra Textile Processors (supra), the Hon'ble Supreme Court of India was concerned with the correctness of a judgment of the Hon'ble Supreme Court of India in the case of Dilip N. Shroff vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice. However, in para 10 of its order, the said High Court clarified as under:- 10. Question will remain whether situation mentioned in Section 11AC exists, which has to be determined irrespective of the deposit of duty due, prior to issuance of notice. Since this question has not been determined by the Commissioner (Appeals) or by the Tribunal, whose decisions are based on the only consideration of deposit, we set aside the order of the Commissioner (Appeals) and the Tribunal and remand the matter back to the Commissioner (Appeals) for a fresh decision on the question of penalty after determining the question whether the non-payment of duty in the present case at the relevant time, which was made up later, was on account 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 as laid down under Section 11AC and as held by the adjudicating authority. The Tribunal will also take a fresh decision on the question of liability to pay interest. 21. We see that a complete answer is now provided by the two Judge Bench judgment in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of duty on or valuation of excisable goods under any other provisions of this 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 show cause why he should not pay the amount specified in the notice; Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason 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, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words one year , the words five years were substituted: Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or five years, as the case may be. (1A) When any duty of excise ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of six months, from the date of service of the notice on the person under sub-section (1) (2B) Where any duty of excise has not been levied or paid or has been short-levied or shortpaid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid: Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation 1. - Nothing contained in this subsection shall apply in a case where the duty was not levied or was not paid or wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it with intent to evade payment of duty then the Revenue can give notice for recovery of the duty to the person in default within one year from the relevant date (defined in sub-section (3)). In other words, in the absence of any element of deception or malpractice the recovery of duty can only be for a period not exceeding one year. But in case the non-payment etc. of duty is intentional and by adopting any means as indicated in the proviso then the period of notice and a priory the period for which duty can be demanded gets extended to five years. .. 14. Sub-section (1A) of section 11A provides that in case the person in default to whom the notice is given under the proviso to sub section (1) makes payment of duty in full or in part as may be accepted by him, together with interest under section 11AB and penalty equal to 25% of the accepted amount of duty within thirty days of the date of receipt of notice then the proceeding against him would be deemed to be conclusive (without prejudice to the provisions of section 9, 9A and 9AA as provided in the proviso to sub-section (2) of section 11A. Sub-section (1A) and the proviso to sub-section (2) were inserted with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reduced or increased, as the case may be, shall be taken into account: Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court , then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect. Explanation. - For the removal of doubts, it is hereby declared that- (1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President; (1) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person. 17. The main body of sub-section 91) lays do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows: 2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the `Act') inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated which he know ..... X X X X Extracts X X X X X X X X Extracts X X X X
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