TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 222
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....g the said period as the said Notification was rescinded by Notification No. 16/96-C.E. (N.T.) dated 23-7-1996 which had the consequence of abolishing the scheme under the said Notification for utilization of such accumulated money credit for the said purpose w.e.f. 23-7-1996. Thus, it appears that the entire clearances of vegetable products from June, 2003 to May, 2004 were made without payment of Central Excise duty payable. Therefore, the respondent has evaded the payment of Central Excise duty during the said period. With a proposal to pay duty along with interest, a penalty was also proposed under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. During the course of adjudication, the demands were confirmed and the same has been admitted by the respondent but for imposing the penalty, the Commissioner made the following observations : "(v) Regarding the question of imposition of penalty, there is no suppression of facts before the Department or wilful mis-statement or fraud or evasion of duty. In the overall facts and circumstances of the case including the complexity of the issues involved, I come to the conclusion ....
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....el & Co. v. Commr. of Central Excise, Bhopal reported in 2011 (263) E.L.T. 279 (Tri.-Del.) and VVF Ltd. v. Commissioner of Central Excise, Belapur reported in 2011 (267) E.L.T. 134 (Tri.-Mumbai). 6. On careful consideration of the submissions made from both sides before going to the facts and circumstances of the case, the provisions of levy of penalties under Rule 25 of the Central Excise Rules, 2002 are to be seen which are reproduced below : "Rule 25. Confiscation and penalty. - (1) Subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, 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 the notifications issued under these rules, or (b) does not account for any excisable goods produced or manufactured or stored by him, or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act, or (d) contravenes any of the provisions of these rules or....
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.... E.L.T. 184 (P & H), Hindustan Steel Ltd. v. State of Orissa reported in 1978 (2) E.L.T. (J159) (S.C.), Commissioner of Central Excise, Chandigarh v. Sadashiv Ispat Ltd. reported in 2010 (255) E.L.T. 349 (P & H). In all those cases, the Hon'ble High Court of Gujarat in the case of Saurashtra Cement Ltd. (cited supra) has observed in para 17 which is reproduced below : "17 ............For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any wilful misstatement or suppression of fact. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules." The Hon'ble High Court of Punjab & Haryana in the case of Indo German Fab. (cited supra) has observed in Para 7 which is also reproduced below : "7. Reference to th....
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....ng the impugned order. (Pronounced in the open Court..................) Sd/- (Ashok Jindal) Judicial Member 9. [Order per : B.S.V. Murthy, Member (T)]. - I have gone through the order proposed by the learned brother, but with due respect find myself unable to agree with the same. 10. It was submitted that the provisions of Rule 25 are subject to the provisions of Section 11AC of the Act and in view of the observations of the learned Commissioner that there is no suppression of facts before the department or wilful statement or fraud or evasion of duty, the Appeal filed by the Revenue has to be rejected. 11. Rule 25 of Central Excise Rules, 2002 has been reproduced in para 6 above and Rule 25 provides for imposition of penalty on a manufacturer if he contravenes any of the provisions of these Rules or Notifications issued under these Rules with intent to evade payment of duty. 12. Section 11AC of the Central Excise Act has also been reproduced and it can be seen that Section 11AC also provides that penalty is imposable for short levy or non-levy of duty for contravention of any of the provisions of the Central Excise Act or the Rules made t....
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....is connection it would be worthwhile to notice that even Section 11AC has a provision which enables an assessee to get away with paying only 25% of duty towards penalty if the same is paid along with duty and interest within 30 days of the order. Such a provision is not there in Rule 25. Even then penalty to the extent of 100% was upheld when the provisions of Section 11AC allowing payment of 25% penalty was not extended. In this case, the provision of Rule 25 were not considered as invokable only when Section 11AC was invoked. The second decision is by Hon'ble Gujarat High Court in the case of Commissioner of C. Ex. & Customs, Surat-I v. Rajhans Silk Mills (ID) - 2011 (268) E.L.T. 327 (Guj.). It would be worthwhile to reproduce the questions raised before the Hon'ble High Court and considered by them : "1. Whether Section 11AC of the Central Excise Act, 1944 inserted by Finance Act, 1996 with 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"? 2. Whether in the facts and circumstances of the case, the Tri....
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....ad the power to levy penalty within the limits under Rule 25 and Section 11AC, substantial question of law does not arise. In that case only Rule 25 had been quoted and Section 11AC was not quoted, but Section 11AC was invoked and penalty was reduced. In that case also the Department had not invoked Section 11AC at all which would mean that only intention to evade payment of duty was the question. Even in such a case, the Hon'ble Gujarat High Court took the view that Section 11AC could be invoked. The analysis of these two decisions would show that when it comes to evasion of duty with intention to do so, penalty can be imposed under Section 11AC or Rule 25 and Rule 25 is not dependent on Section 11AC. 18. In this case Revenue is in Appeal seeking imposition of penalty under Rule 25 only. In fact the discussion above would show that Section 11AC also was invokable. However, the Tribunal definitely cannot consider provisions of Section 11AC for imposition of penalty when Appellant Revenue is seeking penalty under Rule 25 only. 19. As contended in the appeal memorandum, ld. Commissioner has not at all discussed his rationale for not imposing penalty under Rule 25 of Centr....
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....arly that the respondents was fully aware that the money credit lying in RG-23B part-II register could not have been refunded to them and could not have been utilized by them for payment of duty subsequently. The Writ Petition was filed precisely for this purpose. If they were having a bona fide belief that they could utilize the credit subsequently, they would not have filed a Writ Petition. Similarly if they felt that they were entitled to refund, the refund claim would have been filed which was also not done. By 12-5-2003 it was clear to the Appellant that they were not eligible for utilizing the credit. Further it has to be noted that the credit was lying in a statutory register RG-23B part-II which was specifically prescribed for this purpose only. In the absence of specific provision for utilizing this credit either from the statutory register or by way of specific provision in the Rules, any Central Excise assessee would have been aware that such utilization would be illegal. In spite of all these factors, they went ahead and utilized the credit available in the books for payment of duty amounting to Rs. 1,52,25,421/- (Rupees One Crore Fifty Two Lakhs Twenty Five Thousand Fo....
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.... Member (Technical) POINTS OF DIFFERENCE (A) Whether it has to be held that if no penalty is imposable under Section 11AC of Central Excise Act, 1944, no penalty can be imposed under Rule 25 also as held by Learned Member (Judicial) or it has to be held that penalty under Rule 25 can be imposed independently of Section 11AC of Central Excise Act, 1944. (B) In the facts and circumstances of this case whether it can be said that there was intention to evade payment of duty and penalty can be imposed under Rule 25 of Central Excise Rules as held by Learned Member (Technical) or no penalty can be imposed under Rule 25 as held by Learned Member (Judicial). (C) Whether penalty of Rs. 35,00,00/- (Rupees Thirty Five Lakhs only) is required to be imposed under Rule 25 as held by learned Member (Technical) or the matter has to be remanded in the absence of any opinion of learned Member (Judicial) regarding quantum of penalty. Sd/- (Ashok Jindal) Member (Judicial) Sd/- (B.S.V. Murthy) Member (Technical) 21. [Order per : S.K. Gaule, Member (T)]. - Heard both sides....