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TMI Blog2017 (2) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee who evaded Central Excise Duty by suppression of facts and in contravention of Rules under Central Excise Law?" [2.0] Facts leading to the present Tax Appeal in nutshell are as under: [2.1] The respondent assessee M/s. Shanoo Fashion Pvt. Ltd., Surat who was engaged in the manufacturing of man made fabrics (processed) falling under Chapter 54 of the Central Excise Tariff Act, 1985. [2.2] That the Officers of the Central Excise visited factory premises of the assessee on 20.11.1998 and carried out preventive checks which resulted in recovery of documents revealing that 5805 pcs of MMF(P) goods admeasuring 5,83,748 Mtrs valued at Rs. 1,05,07,465/had been illicitly removed by the assessee. The Officers also recovered excess stock of 125 pcs of MMF (P) goods admeasuring 12,644.25 Mtrs. valued at Rs. 2,27,597/which did not tally with the lot register and placed the said goods under seizure. The Officers further recovered excess stock of 131 pcs of semi processed fabrics admeasuring 13,664.50 Mtrs valued at Rs. 1,70,806/which also came to be seized. [2.3] A show cause notice was issued by the Commissioner of, Central Excise and Customs, SuratI dated 07.05.1999 upon the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay interest @ 20% p.a. on delayed payment of evaded Central Excise duty under Section 11AB of the Central Excise Act, 1944. d) Imposition of penalty equal to duty on the processed MMF under Rule 173Q(1) of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944. e) Imposition of penalty of Rs. 1,00,000/under Rule 209A of the Central Excise Rules on the Director of the assessee. f) Confiscation of land, building, plant and machinery etc. used in the manufacture / production storage and removal of the offending excisable goods with an option to redeem the same on payment of redemption fine of Rs. 20,000/." [2.5] Being aggrieved by the order of the Commissioner, the assessee and its Director filed appeals before the learned CESTAT. The learned CESTAT while deciding the appeals has upheld the duty demand confirmed on goods clandestinely removed. The learned CESTAT has also upheld the confiscation of seized goods and the interest liability and has also upheld the penalty on the Director vide impugned judgment and order. However, the learned CESTAT has set aside the penalty imposed under Rule 173Q(1) of the Central Excise Rules, 1944 (hereinafter referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing on behalf of the appellant has vehemently submitted that while deleting the penalty imposed under Rule 173Q of the Rules, 1944 read with Section 11AC of the Act, 1944, the learned CESTAT has not properly appreciated the object and purpose of the penalty imposed in terms of Rule 173Q of the Rules, 1944 and Section 11AC of the Act, 1944. It is further submitted by Shri Shah, learned Counsel appearing on behalf of the appellant that the penalty imposed under Rule 173Q(1) of the Rules, 1944 will be different than that of penalty imposable under Section 11AC of the Act, 1944. It is submitted that in the present case the penalty is imposable under both i.e. under Rule 173Q(1) of the Rules, 1944 as well as under Section 11AC of the Act, 1944. It is submitted that therefore the learned CESTAT has materially erred in quashing and setting aside the penalty imposed under Rule 173Q of the Rules, 1944 read with Section 11AC of the Act, 1944 solely on the ground that as the penalty imposed in terms of Rule 173Q(1) of the Rules, 1944 and Section 11AC of the Act, 1944 being composite penalty cannot be sustained. Making above submissions it is requested to allow the present Tax Appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r subsection (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined: Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty, as reduced or increased, as the case may be, shall be taken into account. 173Q. Confiscation and penalty. (1) Subject to the provisions contained in section 11AC of the Act and subrule (4) of rule 57I and subrule (6) of rule 57U, if any manufacturer, producer, registered person of a warehouse or a registered dealer,- (a) removes any excisable goods in contravention of any of the provisions of these rules; or (b) does not account for any excisable goods manufactured, produced or stored by him; or (bb) takes credit of duty or money in respect of inputs or capital goods for being used in the manufacture of final products or capital goods for use in the factory of the manufacturer of final product, as the case may be, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a person with whose handwriting or signature he is familiar; or (c) on the strength of a certificate issued to the manufacturer or the supplier, as the case may be, by the Superintendent of Central Excise within whose jurisdiction such manufacturer has his factory or the supplier has his place of business: Provided that where the identity and address of the manufacturer or the supplier is satisfied on the strength of a certificate, the person availing of credit of duty shall retain such certificate for production before the proper officer on demand." Under Section 11AC of the Act, 1944, penalty is imposable / leviable for shortlevy or nonlevy of duty. Section 11AC of the Act, 1944 provides that where any duty of excise has not been levied or paid or has been shortlevied or shortpaid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement 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 subsection (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined. A penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11AC of the Act, 1944 may not be leviable / imposable if the concerned person is not found liable to pay duty as determined under subsection (2) of section 11 of the Act, 1944. But if he is a manufacturer, producer, registered person of a warehouse or a registered dealer in that case on the eventuality occurred as mentioned in Rule 173Q of the Rules, 1944, the penalty is imposable / leviable on the manufacturer, producer, registered person of a warehouse or a registered dealer as the case may be. Thus, in a case where a composite penalty is levied under both the provisions i.e. under Rule 173Q of the Rules, 1944 and section 11AC of the Act, 1944 and if it is found that it is not possible to bifurcate the penalty imposable under Section 11AC of the Act, 1944 and Rule 173Q of the Rules, 1944 and/or it is not possible to apportion quantum of penalty imposable under Rule 173Q of the Rules, 1944 and/or section 11AC of the Act, 1944, in such a case the matter may be remanded to the appropriate Adjudicating Authority to redetermine the quantum of penalty either under Rule 173Q of the Rules, 1944 and/or section 11AC of the Act, 1944, as the case may be. However, to set aside the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is leviable upon the assessee both under Section 11AC of the Act, 1944 as well as under Rule 173Q of the Rules, 1944. Under the circumstances, the aforesaid decisions shall not be applicable to the facts of the case on hand. It is required to be noted that in the present case the penalty imposed is Rs. 21,01,493/only, which is leviable both under Rule 173Q(1) of the Rules, 1944 as well as under Section 11AC of the Act, 1944. Under the circumstances, in the facts and circumstances of the case narrated hereinabove, the learned CESTAT has materially erred in quashing and setting aside the order of penalty imposed upon the assessee, imposed under Rule 173Q of the Rules, 1944 and Section 11AC of the Act, 1944. [6.0] In view of the above and for the reasons stated above, present Tax Appeal succeeds. Impugned order No.A/13071308/ WZB/2005/CI/EB dated 18.10.2005 passed by the learned Customs, Excise and Service Tax Appellate Tribunal, Mumbai in quashing and setting aside the order of penalty imposed under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944 upon the assessee is hereby quashed and set aside. The question of law is answered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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