TMI Blog2018 (8) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... able to establish the ingredients of Section 11AC - In the present case, the allegation is that the appellant has cleared excess quantity of Bitumen than that has been mentioned in the certificates issued as per Notification 108/1995. They have raised proper invoices showing that Bitumen is cleared as per Notification 108/1995 without collecting duty. The ER1 returns also reflected the excess quantity supplied. The appellants have not concealed the supply of the goods or is there any allegation that they have diverted the goods to any other customers. They have cleared the goods only to the contractors of the road project - There is no deliberate deception by any means of willful suppression, fraud or misrepresentation established on the part of the appellant. It has to be taken note that the appellant is a public sector undertaking - Appreciating the facts as well as evidence, it can be concluded that the department has not established suppression of facts with intent to evade payment of duty as provided under section 11AC of the Act. The penalty imposed under section 11AC is unjustified - appeal allowed - decided in favor of appellant. - Appeal No. E/42239/2016 - Final Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant was eligible to supply 18,358 MTs of Bitumen for road laying project under the notification without payment of duty. The excess quantity of 877.65 MTs was supplied only due to inadvertence. The appellant did not recover any duty for the supply of the said quantity of Bitumen. The goods / Bitumen supplied as per the notification was disclosed in the ER1 returns filed by the appellant. Since it was very difficult to monitor supply made for different projects manually, the appellant depended upon computer system to monitor supply for the World Bank projects. During the period of switching over from Oracle to ERP, the actual certified balance quantity of Bitumen was not brought forward to ERP system. Hence during the transition period, delivery orders were issued inadvertently over and above the quantity certified by project authorities. The quantity so supplied in excess is very negligible and comes to only 5% of the total supplies made for the project. That there was no intention to evade payment of duty and it was only due to inadvertent error. Further, the excess supply had only occurred due to the nature of the materials being stored in tanks and required to be poured out. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their ER - I returns and also declared that the quantity is supplied in terms of Notification 108/95. It was categorically held in page 8 of the said order that it cannot be said that the duty liability has arisen consequent to any malafide intention to evade payment of duty. The appellant being a public sector undertaking, failure to remit the duty towards excess quantity of Bitumen cleared was only due to lack of proper monitoring of the supplies. It is also noted therein that the excess quantity was issued as per invoices and were supplied to intended customers only. Taking note of these along with the fact that the alleged excess quantity would work out to be only 5% of the total supply, the Commissioner (Appeals) in the first round of litigation had set aside the penalty imposed under section 11AC. 7. However, in the second round of litigation, after the matter was remanded to the Commissioner (Appeals), by the Tribunal, the Commissioner (Appeals) vide order impugned herein has held that there is suppression of facts with intention to evade payment of duty. Commissioner (Appeals) held that the appellant cannot escape the penalty under section 11AC. 8. For better apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 sub-section (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 sub-section (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 person under sub-section (1), the Central Excise Officer, - (a) in case any duty of excise has not been levied or paid or has been short-lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1944 is reproduced as under:- 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 the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrectness of invocation of extended period. Sub-section (1A) of Section 11A states that even in cases when alleged the duty is not paid by reason of fraud, collusion or willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or Rules with intent to evade payment of duty, the person to whom notice has been served under proviso to sub-section (1) may opt to pay duty along with interest together with penalty being 25% of duty. The proviso to sub-section (2) states that when duty, interest and reduced penalty as under sub-section (1A) is discharged, the proceedings in respect of such person is deemed to be concluded. The second proviso says that when such person has paid duty in part, interest and penalty as under sub-section (1A), the adjudicating authority has to determine the amount of duty or interest not being in excess of the amount which is balance due from such person. Thus, as per sub-section (1A) r/w second proviso to sub-section (2), even in cases where there is demand of duty on account of allegation of fraud, suppression of facts, there is an option to pay reduced penalty. It can be seen that even though extended period is invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch cases was duty bound to impose penalty equal to the duties so determined. The assessee on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act ) taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the Rules ) and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided for. It only stated which he knows or has reason to believe . The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for discretion but that is not the case here. 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though 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 11A. That is what Dharamendra Textile decides. 24. It must, however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only in so far as Section 11AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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