2019 (6) TMI 5

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....Sandya had given an authorization letter dated 22/2/2012 to her husband Shri V. Satish who is in-charge of the appellant concern and who also knew about the entire operations; that in his statement recorded on 22.02.2012, the said person had stated interalia that the goods were actually manufactured and cleared from the factory using two different types of invoices containing two different addresses of the appellant; that therefore the appellant had contravened Rule 4 (1) read with Rule 8 (1), Rule 6, Rule 9 and Rule 11 of the Central Excise Rules, 2002; etc. The above SCN also proposed the imposition of penalty under Rule 26 ibid on the proprietrix and the other person in-charge. 2. After considering the plea of the appellant, Order-in-Original dated 06.02.2013 came to be passed wherein, the adjudicating authority has confirmed all the demands and the same has also been appropriated. The adjudicating authority, however, has proceeded to levy penalty under Rule 26 ibid only on Shri V. Satish who is in-charge but not on the proprietrix for which he has relied on the decision of Hat Sun Milk Food Ltd. Vs. CCE, Coimbatore - 2001 (136) ELT 916 (Tri.-Chen.) Apparently, the OIO is sent/....

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....authorities. He also invites my attention to the categorical observations/findings in the SCN as well as OIO with regard to the conduct of the assessee as to manufacturing and clearing of PVC pipes improperly. On the service, he submitted that though the order was despatched, Shri V. Satish appeared before the Superintendent with duly authorization letter from proprietrix to whom copy of order was issued, again and hence, the same is a proper service. 7.1 I have considered the rival contentions and also perused the orders of the lower authorities as well as documents placed in the appeal memorandum. On an overall consideration of the allegations in the SCN and reply by the assessee as to the allegation of irregular manufacturing and clearing of PVC pipes, I am of the view that the above discrepancies have not been properly and satisfactorily explained by the appellant. The adjudicating authority has picked up the sale value etc., from the books of the appellant as noted at paragraph-3 of the SCN. But, it is also a fact that upon being pointed out, the appellant admitted duty liability and paid the duty, but interest alone was paid late, on 03.09.2014, which is after the date of th....

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....es it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 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 cou....

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.... indication has been given. "27. Above being the position, the plea that the Rules 96ZQ and 96ZO have 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.........". 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very 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 11....