TaxTMI 
TaxTMI 
2019 (9) TMI 1528
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....ted by the Adjudicating Authority in the adjudication order. However, he chose to impose a penalty of Rs. 5,42,752/- under section 11AC of the Central Excise Act, 1944. The appellants were in appeal before the lower Appellate Authority. The learned Commissioner(Appeals) disposed the appeal ex parte along with dozen other appeals without going into the facts and merits of each case. The arbitrary order passed by the learned Commissioner(Appeals) is as under:- "GOVERNMENT OF INDIA OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE (APPEALS) KOLKATA-IV BAMBOO VILLA (4TH FLOOR) 169, A.J.C. BOSE, ROAD, KOLKATA-700014. F. NO. (1) V (Ch. 72) XAP-200/BOL/07 (2) V(Ch.7202)XAP-201/Bol/07 (3) V(Ch.72)XAP-202/BOL/07 ....
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....11AC of Central Excise Act, 1944- Mensrea not an essential ingredient thereunder -Difference between Section 271 (1)(c) and Section 276 (1) (C) of Income Tax Act, 1961 lost sight or in Dilip N. Shroff case [2007 (219) E.L.T. 15 (S.C.)] - penalty under Section 271(1) (C) ibid is a civil liability, enacted to provide remedy for revenue loss wilful concealment not an essential ingredient for attracting civil liability as is the case of prosecution under Section 276C ibid Union Budget of 1996- 97 making position clear that no scope for discretion under Section 11AC ibid and the levy of penalty is a mandatory penalty - Notes on Clauses also giving similar indication- No. inbuilt discretion under Rules 96ZO and 96ZQ of erstwhile Central Excise Ru....
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....d for ready reference. "17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to sub-section 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. ....
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.... 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 d....
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....atter was referred to a larger Bench." After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows : "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar 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) w....
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....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 specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated "which he knows or has reason to believe". The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the ....