TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1377
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....enalty has been reduced from Rs. 2.63 crores to Rs. 1 crore. 3.1 The appellant party had cleared the goods for the purpose of export after following due procedure from their factory. The goods instead of being taken to port directly for exportation were stored in their warehouse in Bhiwandi. These goods stored in warehouse were subsequently exported. The warehouse in Bhiwandi was not an approved warehouse by the Revenue. After completion of export, appellants would submit the proof of export. 3.2 In certain cases the proof of exports were not submitted within the prescribed time limits. On basis of the intelligence received revenue initiated an investigation in the matter and it was found that appellants have failed to produce proof of export against quite large number of ARE-I. During course of investigation statements various employees as detailed below were recorded. The facts about non submission of proof of export was admitted by the them in their statements. Appellants also paid the duty in respect of the goods covered by the ARE-1 against which proof of export was not submitted. The details of the payments made are enlisted in table below: Sr. No Year Number of ARE-1 fo....
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....ty to Rs. 1 crore. 4.0 We have heard Shri R.M. Patkar, Consultant, for the appellant party and Shri Ajay Kumar, Additional Commissioner (AR), for the Revenue. 5.1 Arguing for the appellant, the learned Consultant submitted that- i. in the present case the goods were in fact cleared for exportation and were in the process of being exported when floods occurred in Mumbai leading to the non-exportation of the goods; ii. agreeing to their failure to export the goods and submission of proof of export they have deposited the duty due; iii. failure to export the goods and submit proof of export occurred because of the reasons beyond their control viz. natural calamity like flood. Also the delay in payment of duty on account of such failure was on this account only; iv. in any case they have paid the entire duty in respect of these goods prior to issuance of show cause notice along with interest suo motu. v. CESTAT has vide its Order No A/86414- 86415/2018 dated 08.03.2018, remanded the matter relating to remission of duty in respect of their goods cleared and stored in the warehouse outside the factory for further exportation destroyed in the flood for fresh determination; vi. sin....
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....ns made by both the sides. 6.1 The issue is in a narrow compass with regard to the quantum of penalty to be imposed upon the appellant for their failure to export the goods cleared without payment of duty under bond for exportation. 6.2 It is an admitted fact that the goods were cleared after following due procedure in law and were after clearance stored in their godown located in Bhiwandi. From the Bhiwandi godown these goods were to be further transported for exportation from the relevant port. However, certain goods could not have been exported and proof of export in respect of some goods (ARE-1) were not submitted by the appellant within the prescribed time. 6.3 From the facts as narrated in the show cause notice and order in original we are not in agreement with the submission of the appellant that they had paid the duty along with interest on their own volition. It was only when the investigations were started against them that they paid the amount due. 6.4 A detailed chart has been annexed to the show cause notice giving details of the date of exportation in which case proof of export had not been submitted. From the said chart the details of payment made are extracted i....
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....on. 6.7 Export under rule 19 of Central Excise Rules, 2002 is a well documented process. It cannot be the case of the department that the appellant had clandestinely cleared the goods for exportation from their manufacturing unit. These goods have been cleared after following due process and preparation of relevant documents. The export should have been properly accounted for and properly monitored by the Revenue also. In case of delay in submission of proof of export, Revenue itself should have asked for recovery of duty in terms of the bond executed. In case they have failed to monitor the submission of proof of export, the appellant cannot be saddled with the responsibility of suppression of fact. If the number of export was not given within six months, the department should have sought for the relevant information from the appellant, and demanded the duty immediately in case appellants had not sought extension of time for submission of proof of export. In case of failure, in asking the said information and demanding the duty in time the appellant cannot be charged with suppression with intent to evade payment of duty for the purpose of invocation of Section 11AC of the Central....
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....d : 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 that proviso : Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purpose of this section, the duty as reduced or increased, as the case may be, shall be taken into account : Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect - Explanation. - For the removal of doubts, it is hereby declared that - (1) the provisions of this section shall also apply to cases in which the order determining the dut....
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..... 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows : "2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai & Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the "Act') inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential....
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....ry strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows : "5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specificall....