TaxTMI 
TaxTMI 
2023 (5) TMI 432
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....oth dated 21.03.2011. 2. I hold that assessee is liable to pay interest of Rs. 1,26,11,353/- under Section 11AB Rule read with Rule 14 of Cenvat Credit Rules 2004 and appropriate the interest of Rs 1,26,11,353/- already paid by them. 3. I impose penalty of Rs. 3,13,57,481/- under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the CEA, 1944. However, the penalty is reduced to 25% of the above amount as the assesee has already paid the duty along with interest as per Section 11AC(3) applicable during the relevant period." 2.1 Appellant is engaged in manufacture of aluminium products falling under Chapter 76 of the First Schedule to the Central Excise Tariff Act, 1985. Appellant had imported capital goods under the EPCG scheme and DEPB scheme. While taking Cenvat credit of additional duty on capital goods imported under DEPB scheme, appellant also took the credit of additional duty paid on capital goods under EPCG scheme against nine Bills of Entry. During the course of CERA audit it was observed that the appellant had availed the benefit of Notification No. 97/2004 dated 17.09.2004 and Notification No. 64/2008 dated 09.05.2008 thereby the capital....
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....ty should not have been imposed on the appellant as has been held in following decisions:- Cosmic Dye Chemical [1995 (75) ELT 721 (SC)] Pushpam Pharmaceuticals Co. [1995 (78) ELT 401 (SC)] Chemphar Drugs and Liniments [1989 (40) ELT 276 (SC)] Lalit Ashok [2022 (66) GSTL 314 (Kar.)] Aswin Textiles Pvt. Ltd. [2015 (7) TMI 496 - CESTAT maintained as reported at [2021 (2) TMI 490 - MADRAS HIGH COURT. As the mistake was a genuine mistake, penalty should not have been imposed in view of the decisions as follows:- Paharpur Colling Towers Ltd. [2007 (215) ELT 425 (T)] affirmed by Hon'ble High Court at [2015 (324) ELT A84 (All.)] Gaurav Agro Plast Ltd. [2009 (236) ELT 31 (Guj.)] Indian Aluminium Co. Ltd. [2010 (259) ELT 12 (SC)] Vickers System International Ltd. [2008 (221) ELT 445 (T)] The entire disputed credit along with interest has been paid prior to issuance of show cause notice. Therefore penalty under Section 11AC should not have been imposed as has been held in following decisions : - Gaurav Mercantile Ltd. [2005 (190) ELT 11 (Bom.)] Rashtriya Ispa Nigam Ltd. [2003 (....
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....ailable in this case, they argued that penalty u/s 11AC is not imposable. In support of their contention they have cited various decisions of Hon'ble Supreme Court and Tribunal. Some of the case laws cited by them and the gist of the case laws are given below: 1. Pahwa Chemicals Pvt. Ltd. vs. CCE-2005(189)ELT 257(SC) Mere failure to declare does not amount to misdeclaration or willful suppression - some positive act on part of party to establish either willful misdeclaration or willful suppression is must- When all facts are within knowledge of Department and a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no willful misdeclaration or willful suppression - Section 11AC(1) of Central Excise Act, 1944. 2. Continental foundation Jt. Venture vs. CCE -2007(216) ELT 177(SC) "suppression" used in proviso to Section11 A of Central Excise Act, 1944 to be construed strictly - Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty- Suppression means failure to disclose full information with intent to evade payment of duty - An incorrect ....
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....statement or suppression of facts or contravention of any of the provisions of the Excise Act, with intention to evade payment of duty. In this case, the assessee has availed wrong credit and not disclosed the same to the department. This clearly establishes the fact that they have contravened the provisions of Rule 9 read with Rule 3 of Cenvat Credit Rules and Rule 12 of the Central Excise Rules. Accordingly, Rule 15(2) read with Section 11AC has been rightly invoked in this case. Hence I hold that the assessee is liable for penalty under Rule 15(2) of Cenvat Credit Rules read with Section 11AC of Central Excise Act 1944. However, as the assessee has already paid the wrongly availed credit along with interest, the penalty imposable under Section 11AC read with Rule 15(2) of CCR, 2004 is restricted to 25% of the wrongly availed credit. Section11AC(3) applicable during the relevant period is reproduced below: *where any duty as determined under sub-section 11A and the interest payable thereon under Section 11AA in respect of transactions referred to n clause (b) is paid within thirty days of the date of communication of order of the Central Excise Officer who has d....
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....he period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees 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 th....
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.... 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) 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 subm....
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....ing informed, the issue should have been settled under Section 11A(2B) of the Central Excise Act. We rely upon the decision in the case of Gaurav Mercantiles Ltd. [2005 (190) ELT 11 (Bom.)] wherein it has been held as follows:- "4. Factual matrix reveals that the show cause notice was issued on 19-4-2002 whereas entire amount of duty and penalty was paid on 31-1-2001 and 1-9-2001. It is thus clear that the entire duty liability was paid prior to the issuance of show cause notice. 5. Learned Counsel appearing for the respondent-assessee tried to support the order of the Tribunal on the basis of two judgments; one of the Madras High Court in the case of CCE, Madras v. Jkon Engineering (P) Ltd., 2005 (67) RLT 157 (Mad.) and another from the Karnataka High Court in the case of Commissioner of C. Ex., Mangalore v. Shree Krishna Pipe Industries, 2004 (165) E.L.T. 508 (Kar.), wherein both the Courts have taken a view that where duty or penalty imposed has been deposited before issuance of show cause notice under Section 11AC of the Central Excise Act, 1944, no action under Section 11AC of the Central Excise Act should be initiated or taken. 6. It is also brought....