9911796707
TMI Blog2024 (12) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted from 07.02.2024 to 14.02.2024. Another letter was issued on 14.02.2024 as a reminder. Again a letter was issued on 19.02.2024 by the Superintendent informing the petitioner company that during the audit conducted by the CAG, it was found that excise duty has not been deposited within time, therefore, interest and penalty are liable to be paid. On 16.04.2024, the Superintendent sent a letter directing the petitioner company to pay the interest and penalty on account of delay in depositing the excise duty. As the amount was not deposited, another letter was issued by the Assistant Commissioner, Division East-1, GST, Gurugram, to the Branch Manager, Canara Bank, South Extension Park-1, New Delhi to freeze the bank account of the petitioner company by invoking the provisions of Section 11 (2) of the Excise Act. Learned Senior counsel appearing for the petitioner company has vehemently argued that the entire process of recovery has been initiated based on the CAG Audit Report which was conducted for the period 20182019. He submits that the provisions of Section 11A(1) and 11A(14) of the Excise Act, which are applicable for recovery of interest have been ignored. The audit report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Further reminders were sent on 08.04.2024 and 16.04.2024 but no response was received. Accordingly, the Assistant Commissioner on 02.05.2024 directed the Branch Manager, Canara Bank, to freeze petitioner's bank account by invoking Section 11 (2) of the Excise Act. It is stated that as per the audit, a sum of Rs. 3,86,75,854/- and a penalty of Rs. 3,08,01,956/- is required to be paid. But the petitioner has only deposited a sum of Rs. 1 crore. The total amount of Rs. 6,99,00,810/- is an outstanding against the petitioner company. It is also informed that the petitioner company is guilty of separation of facts and has not come out with clean hands. It did not declare the correct bank accounts and gave an account number of the bank, which was lying dormant since the last 10 years and had remained inoperative, while the petitioner company is utilizing the public revenue in its favour. The provisions of Section 11A(16) of the Excise Act were relied upon to submit that in cases where there is admitted non-payment of duty in time, interest and penalty is required to be paid and no show cause notice is required to be issued for the said purpose. 3. We have carefully considered the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty and interest payable under section 11AA is paid either before the issue of show cause notice or within thirty days of issue of show cause notice, no penalty shall be payable by the person liable to pay duty or the person who has paid the duty and all proceedings in respect of said duty and interest shall be deemed to be concluded; (b) where any duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA in respect of transactions referred to in clause (a) is paid within thirty days of the date of communication of the order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty-five per cent. of the penalty imposed, subject to the condition that such reduced penalty is also paid within the period so specified; (c) 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 or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty of excise has not been levied or paid or has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder; (ii) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid and the return has been filed, the date on which such return has been filed; (iii) in any other case, the date on which duty of excise is required to be paid under this Act or the rules made thereunder; (iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (v) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund; (vi) in the case where only interest is to be recovered, the date of payment of duty to which such interest relates. (c) specified records means records including computerised records maintained by the person chargeable with the duty in accordance with any law for the time being in force. Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of show cause notice. From the aforesaid provisions, it is apparent that for imposition of penalty, a show cause notice is required to be issued. As per Section 11AA(3)(b) of the Excise Act, if the amount has been paid voluntarily, no interest is required to be paid if the short duty is paid within forty-five days without reserving any right to appeal. Thus, if a firm or an assessee is informed about its non-payment of duty in time, there is a provision to pay voluntarily to avoid any interest or penalty. 6. Admittedly, the petitioner has been demanded interest and penalty on the excise duty, which the petitioner company has already paid on the basis of an audit report. The same was admittedly paid after due date. While this Court notes that the amount was paid voluntarily before any interest or penalty could have been imposed, show cause notice was required to be given to it to explain the delay as Section 11AA as well as Section 11AC lay down different circumstances wherein the interest would be payable. If the petitioner would have been given an opportunity of hearing, the authorities would have reached to a conclusion whether the duty paid by the petitioner can be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions shows that before any demand is made on any person chargeable in respect of non-levy or short-levy or under payment of duty, a notice requiring him to show cause why he should not pay the amounts specified in the notice must be served on him. It is the admitted position in the present case that no such notice was served. It would thus appear that the aforesaid demand notice, dated 7th February, 1984 was in violation of the provisions of Section 11A and is bad in law. Mr. Govind Das, learned counsel for the appellant, however, contended that although the aforesaid section provides that no demand could be made against a person thereunder without affording that person an adequate opportunity to show cause against the same, in the present case, though no prior show cause notice was given and the petitioners were not given an opportunity to be heard before the notice of demand was issued, such a notice was issued and an opportunity to show cause was given after the demand was made and the demand confirmed after hearing and hence it must be regarded as valid. It was submitted by him that a post facto show cause notice should be regarded as adequate in law. In support of this con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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