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TMI Blog2016 (12) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Later on, the Revenue submits that the decision of the Hon'ble Supreme Court of India in the case of Union of India vs. Dharamendra Textile Processors 2008 (231) ELT 3 (SC) concludes the issue and the larger Bench decision of the tribunal cannot be said to be a good law. 4. It is only to ascertain this fact that the matter was placed on board earlier for directions with a full understanding that in the event the parties conclude their arguments in a short time, this court would dispose of the appeal finally. 5. By consent, therefore, we have placed the matter today. Though it is placed under the same caption, the above understanding continues. 6. The Commissioner/Revenue approached this court aggrieved by an order passed on 16th May, 2005 by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT). 7. The facts in a nut shell are that respondent M/s. Hindustan Petroleum Corporation Ltd. (HPCL) is holder of Central Excise registration. It is engaged in the manufacture of various petroleum products and which are classified under the First Schedule to the Central Excise Tariff Act, 1985. 8. It is the case of the Revenue that by suppression of facts and will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or suppression of facts. In the present case, there is a clear finding of fact that each of the acts and deeds of the assessee were known to the Revenue and its officials. It is not as if any clandestine or illegal act deliberately with a view to evade the duty was committed. Once there are no malafides attributed and of the nature referred above, then, the questions of law as framed should not be answered in favour of the Revenue. They can be answered safely in favour of the assessee without disturbing the tribunal's order. Mr. Patil has brought to our notice a clarificatory order passed by a two Judge Bench of the Hon'ble Supreme Court of India in the case of Union of India vs. Rajasthan Spinning and Weaving Mills 2009 (238) ELT 3 (SC). 16. With the assistance of both sides, we have perused the memo of appeal and all the annexures. The Commissioner, in the order-in-original, rendered a finding that the assessee/respondent before us is a public sector undertaking. It is manufacturing liquefied petroleum gas and other petroleum products. That was sold for domestic as well as industrial user on the basis of the price fixed by the Ministry of Petroleum and Natural Gas, G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 determined. The assessee argued on the other hand that section 11AC is identically worded to section 271(1)(c) of the Income Tax Act, 1961 and in a given case, it was open to the assessing officer not to impose any penalty. That is how the arguments proceed and in para 8 of the three Judge Bench judgment section 11AC was reproduced so also Rule 96ZO and ZQ. We are not concerned with the later two rules. The Hon'ble Supreme Court also referred to section 271 and reproduced it. The penalty is mandatory or otherwise was thus the focal point in issue. The Hon'ble Supreme Court of India applied the well settled principles of interpretation and came to the conclusion that the plea that there is an element of discretion in Rules 96ZO and 96ZQ cannot be sustained. Dilip N. Shroff (supra) was not correctly decided. That is how wherever there is no discretion or the language of the statute does not permit exercise thereof, then, there is no warrant to read that stipulation into the same. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (supra), the Hon'ble Supreme Court had taken a view that mere non payment or short payment of duty, without anything else would inevitably lead to imposition of penalty equal to the amount by which duty was short paid. The Hon'ble Supreme Court of India came to the conclusion in the case of Rajasthan Spinning (supra) that the reason assigned by the tribunal to strike down the levy of penalty against the assessee is as misconceived as the interpretation of Dharamendra Textile (supra). That is misconstrued by the Revenue. The Hon'ble Supreme Court of India concluded that it fails to understand how payment of the differential duty, before or after, can alter the liability of penalty, the conditions for which are squarely spelt out in section 11AC. After noting the facts at length, the arguments of both sides, the Hon'ble Supreme Court of India concluded as under:- "11. In a case of non-payment, short-payment or erroneous refund of duty normally three issues are likely to arise relating to (i) recovery, (ii) interest and (iii) penalty. The three issues are dealt with under section 11A (Recovery of duties), section 11AA (Interest for the period from three months afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest payable thereon under Section 11AB and penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by such person within thirty days 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 subsection (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 with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of section 9, 9A and 9AA, be deemed to be conclusive as to the matters stated therein: Provided further that, if such person has paid duty in part, interest and penalty under subsection (1A), the Central Excise Officers, shall determine the amount of duty or interest not being in excess of the amount partly due from such person. (2A) Where any notice has been served on a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be determined by the Central Excise Officer, but for this sub- section. (2C) The provisions of sub-section (2B) shall not apply to any case where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. (3) For the purposes of this section- (i) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (ii) "relevant date" means,- (a) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or shortpaid- (A) where under the rules made under this Act a periodical return, showing particulars of the duty paid on the excisable goods removed during the period to which the said return relates, is to be filed by a manufacturer or a producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed; (B) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (C) in any other case, the date on which the duty is to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the main provision. Explanation 1 makes it clear that the payment would, nevertheless, be subject to imposition of interest under section 11AB. Explanation 2 makes it further clear that in case the escape of duty is intentional and by reason of deception the main provision of subsection (2B) will have no application. 16. The other provision with which we are concerned in this case is section 11AC relating to penalty. It is as follows: 11AC. Penalty for short-levy or non-levy of duty in certain cases.- where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons 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, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined: Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under section 11A (1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under section 11A (2) there is a legally tenable finding to that effect then the provision of section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under section 11A(2) there would be no application of the penalty provision in section 11AC of the Act. On behalf of the assessees it was also submitted that section 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of section 11AC would come into play only after an order is passed under section 11A92) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in section 11AC. 19. From the aforesaid discussion it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act, Section 11AC of the Act and Rule 96ZQ(5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case (supra). Therefore, the matter was referred to a larger Bench." After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows: "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. 27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered.........". 21. From the above, we fail to see how the decision in Dhar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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