TaxTMI 
TaxTMI 
2015 (3) TMI 737
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.... under Section 11AB of the Act? iii) Whether on the facts and circumstances of the case, the Appellate Tribunal is right in vacating the penalty and the demand of interest observing that the ingredients to invoke larger period are absent whereas the respondent/assessee had taken registration and started paying duty only after the investigation conducted by the Department?" 2. The facts, in a nutshell, are as hereunder :- The respondent/assessee is engaged in repacking of goods falling under sub-heading 3819.00 and 3820.00 of the Central Excise Tariff Act, which were received from Indian Oil Corporation (for short 'IOC'), which is a public sector undertaking. IOC supplied Hydraulic Brake Fluid and Servo Kool (Servo Brake Fluid) to the appellant. After repacking, the respondent/assessee is despatching the repacked goods to various depots of IOC as per instructions from IOC. Those raw materials were received in bulk under invoice issued under Rule 52A of the Central Excise Rules, 1944. Along with those raw materials, the assessee received packing materials such as plastic containers of various dimension along with printed cartons for packing those goods. Those packing....
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....They suppressed this information from the Department with the intention to evade payment of duty. M/s.PMP are, therefore, liable to pay central excise duty on the repacked coolants and brake fluids in unit containers in terms of the proviso to Section 11A (1) of the Act. They are not eligible for SSI ememption since they are using the brand name SERVO belonging to IOC, on their products." 6. The above show cause notice was issued invoking the proviso to Section 11 (A) (1) of the Act extending it for demand to the larger period. The quantification of the differential demand for duty and liabilities made in the show cause notice, for better clarity, are extracted hereunder :- "12. Therefore, M/s.Peter & Miller Packers at 130, Rama Naicken Street, Royapuram, Chennai 13 are required to show cause to the Commissioner of Central Excise, Chennai I Commissionerate, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 34, within 30 days from the date of receipt of this notice, as to why (i) the Central Excise Duty of Rs. 30,91,400/- (Rupees Thirty Lakhs Ninety One Thousand and Four Hundred only) being the duty on the clearances and the stock as on 24-7-98, of Ser....
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....2,17,984/- towards duty payable on the repacked goods manufactured and cleared/held in stock by M/s.PMP during the period from January, 1998 to 24.7.98 under Rule 9 (2) of the rules read with proviso to Section 11A (1) of the Act subject to my observation in para 12 of this order. I also order adjustment of an amount of Rs. 1,51,000/- being the duty paid on the stock of repacked goods available with them on the date of detection of the case against the demand confirmed through they have claimed that Rs. 3,47,369/- had been paid towards duty liability on the stocks held as on 24.7.98. The Assistant Commissioner had confirmed that only an amount of Rs. 1,51,000/- alone had been paid by M/s.PMP towards the duty liability. (b) I impose a penalty of Rs. 32,17,984/- on M/s.PMP under Section 11AC of the Act. (c) I also impose a penalty of Rs. 50,000/- on M/s.IOC under rule 209A of the Rules. (d) I hold that an amount of Rs. 3,00,633/- paid by M/s.IOC cannot be adjusted against the demand confirmed against M/s.PMP." 10. Aggrieved against the said order, the assessee moved appeal before the Tribunal and the Tribunal, taking note of the plea that Modvat credit is available to the....
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....enalty could be imposed under Section 11AC so also interest under Section 11AB and accordingly allowed the appeal filed by the assessee. The reasoning of the Tribunal, for better clarity, is extracted hereunder :- "4. We have carefully considered the facts of the case and the submissions made by both sides. The appellant does not dispute their liability to duty on the subject clearance. The consistent case of the appellant had been that the failure to pay the duty due occurred owing to their coming to know of the requirement belatedly. Even the executive of the IOC which had been excise control for generation was unaware of the legislative changes which fastened the subject liability to the appellants. In the impugned order, the Commissioner does not find mens rea on the part of the appellants in not paying the duty. He only found that the assessee which undertook repacking of the impugned goods in labeled containers could not plead ignorance of law. He found that the appellants were guilty of suppression of material facts and that intention of PMP was established. We find that this finding is without any basis. We are inclined to believe that PMP did not pay the duty on the imp....
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....o evade duty, the Commissioner (Appeals) was right in demanding duty along with interest and penalty and the order of the Tribunal setting aside the same is liable to be interfered with. 14. Heard the learned standing counsel appearing for the appellant/Revenue and perused the materials available on record. Inspite of notice, there is no representation on behalf of the respondent/assessee. 15. On a perusal of the order of the Tribunal, it is evident that the Tribunal has primarily acted upon the fact that even IOC, which was under Excise Control for generations, was unaware of the relative changes in law and, therefore, the stand of the respondent/assessee, a bulk repacking unit that it had no knowledge of the change of law has to be accepted. In fact, the Tribunal accepted the plea of the ignorance of law as a primary reason and, accordingly, held that demand invoking the larger period provided under proviso to Section 11A could not be sustained. Accordingly, the Tribunal went on to hold that the penalty and interest levied thereon also are unsustainable. 16. In this case, we have already extracted both the adjudication orders, viz., on the first occasion and, thereafter,....
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....ired before it is saddled with any liability, beyond the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provi- sion of any Act, is a question of fact depending upon the facts and circumstances of a particular case." 19. In the case of Pushpam Pharmaceuticals Company Vs Collector of Central Excise, Bombay (1995 (Supp) (3) SCC 462), the Supreme Court held as under :- "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of s....
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....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...." 9. The above-said decision was followed by the Supreme Court in the case of Union of India V. Rajasthan Spinning and Weaving Mills reported in JT 2009 (7) SC 314 - 2009 (238) E.L.T. 3 (S.C.), wherein, the Supreme Court held as follows: "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 reg....