TaxTMI 
TaxTMI 
2009 (6) TMI 89
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....f goods the payment of part of duty subsequently made on notice by the department prior to issue of show cause can discharge the Respondent from the rigour of provisions of Section 11AC of Central Excise Act, 1944?" 2. The facts are not disputed. A show cause notice was issued on 9th January, 2001. A reply was filed to the said show cause notice. The A.O., by his order dated 26th August, 2002 demanded duty and also imposed penalty. It may be mentioned that the respondents before issuance of the show cause notice had paid an amount of Rs. 66,096/- towards the differential duty amount. The A.O., found that there was a balance amount of Rs. 3,888/-. The Respondents aggrieved preferred an Appeal before the Commissioner (Appeals), who upheld ....
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....penalty than the duty adjudicated to be payable. It is further submitted that mere payment of duty before issuance of show cause notice is also of no consequence. 5. At the bar it was mentioned that the issue is of vital importance in large number of matters. Considering that Shri Sreedharan, Advocate of this Court was appointed as Amicus Curiae to assist this Court. 6. The learned Amicus Curiae considering Section 11A and 11AC has submitted that in order to impose penalty two predicates are to be satisfied, firstly the duty has to be determined under sub-section (2) of Section 11A and secondly, that the duty was not paid with an intent to evade payment. It is only on satisfaction of these to predicates can penalty be imposed under Se....
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.... paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause whey he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason 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, ....
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....llate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty has reduced or increased, as the case may be, shall be taken into account." 10. The Judgment in Dharamendra Textile Processors (supra) came up for consideration before the Supreme Court in Rajasthan Spinning & Weaving Mills Ltd. (supra). It is necessary to reproduce paragraphs 2 and 15, which read as under :- "2. What are the conditions and the circumstances that would attract the imposition of penalty under Section 11AC of the Central Excise Act ("The Act" hereinafter)? In the two cases before us the Tribunal has taken the view that there was no warrant for levy of penalty since the assessees had deposited the balance amount of excise d....
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....ion 11AB. Explanation 2 makes it further clear that in case the escape of duty is intentional and by reason of deception the main provision of sub-section 2B will have to application. The learned Counsel points out that therefore, the issue that before imposing penalty under Section 11AC there must be an adjudication process was neither raised nor was it decided by the learned Supreme Court and, therefore, it is sub silentio. As to what would constitute sub silentio we would gainfully refer from Solmond on Jurisprudence, Twelfth Edition, by P.J. Fitzgerald, M.A., Indian Economy Reprint, 2002, which reads as follows :- "A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particul....
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....tly, that there must be intent to evade payment of duty and secondly the duty ought to be as determined under sub-section (2) of Section 11A. It is, therefore, clear that it is only on these two requirements being followed that penalty is imposable. The determination of duty admittedly is under Section 11A. The other limb of argument is that once the duty is paid even before the show cause notice, the question of the A.O. in a case where duty demanded has been paid there will be no determination of liability. In our opinion, the argument is fallacious. Under Section 11A there must be a determination of duty irrespective of as to whether duty demanded is paid before issuance of show cause notice or before order is passed. Any amounts paid as....