TaxTMI 
TaxTMI 
2007 (7) TMI 70
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....tner of the said Firm) had also deposited the full amount of penalty. Admittedly, the entire duty amount of Rs. 78,841/- was paid up by the respondent no. 1 by paying Rs. 53,851/- on 12-1-2002 i.e. the date on which the Revenue Officers visited the factory and when shortages were noticed, and the remaining amount of Rs. 25,000/- on 14-1-2002. Twenty five percent of the duty amount was paid by way of penalty on 19-3-2002 presumably for taking the benefit of the provisions of first proviso to Section 11AC of the Act. The respondent No. 2 - partner of the notice No. 1, paid up the full amount of penalty after the order was made. 2. The learned authorised representative for the Revenue has contended that, penalty, equal to the duty, payable ....
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....d counsel appearing for the respondents in these two appeals, argued that, there was no allegation of any intention to evade duty made in the show cause notice and in which penalty was proposed to be imposed under Rule 25 of the said Rules, which prescribes a minimum penalty of only Rs. 10,000/-. It was submitted that, the entire duty amount and penalty calculated at 25% of the duty determined was, admittedly, paid up before the issuance of the show cause notice dated 30-12-2002 He submitted that, there was no demand of interest made in the show cause notice and even no separate demand of interest was required to be made under Section 11AB, since there was no direction to pay interest in the order-in-original. The interest under Rule 11AB w....
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.... also signed the verification charts prepared on the spot, on 12-1- 2002. The said partner (Shri Kamal Singla), in terms, admitted that, the said raw material was sold by them in the local market without entering the same in the statutory records and without issuing invoices and also without paying the Central Excise Duty of Rs. 77,721/-, which was payable thereon. He agreed to deposit duty amount .of Rs. 78,841/-, which came to be deposited, as noted above. Since the manufacture of the excisable goods was not accounted for in the Daily Stock Accounts and the goods were clandestinely cleared without issuance of any invoice and without subjecting the same to assessment and payment of Central Excise Duty, this was a clear case of clande....
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....egistered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or rupees ten thousand, whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice." The penal provisions of Rules 25 and 26 of the said Rules owe their genesis to sub-section (4) of Section 37 of the Central Excise Act, 1944, which empowered the Central Government to make such rules under sub-section (4). Section 11AC of the Act provides for penalty equal to the duty determined with a built- in mechan....
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.... Act or the Rules made thereunder with intent to evade payment of duty, clause (d) of Rule 25(1) contemplates contravention of any of the provisions of the Rules or the notifications issued there under with intent to evade payment of duty. On a combined and harmonious reading of Section 11AC of the said Act and Rule 25 of the said Rules, which obviously cannot be interpreted to take away the rigour of Section 11AC in respect of the cases which fall under clause (d) of Rule 25(1), it would appear that, the maximum liability to pay penalty not exceeding the duty contemplated by Rule 25 would ordinarily be attracted in cases where there is intention to evade payment of duty as contemplated by Section 11AC of the said Act. In other cases, where....
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....ion 11A(2) is required to be done in all cases falling under Section 11A(1) both with and without mens rea. The first proviso to Section 11AC does not confine its benefit to contraventions of the provisions of the Act or the Rules with intent to evade payment of duty, but would apply even in cases where such mens rea is absent and there are contravention of the provisions of the Act and the Rules as covered by clauses (a), (b) or (c) of Rule 25(1). The opening words of Rule 25 make it clear that, the provisions made thereunder are subject to the pro visions of Section 11AC of the Act. Therefore, the benefit of an early payment within 30 days from the date of communication of the order contemplated by the first proviso to Rule 11AC would als....