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2006 (4) TMI 178
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....ound. (a) Causes for arriving at penalties under the Customs Act, 1962 and Central Excise Act, 1944 are not similar, inasmuch as the Former Act raises liability to penalty for transgressions and violation of import/export prohibitions without or with Customs duty infringement while the Later Act chiefly concerns itself as a Revenue Generation measure with penalties related & consequent to such Revenue Generation effort only. The objectives in provisions of Sections 114A & 11AC may be comparable, other penalty provisions e.g. Sections 112 or 114 & 116 of Customs Act, 1962 are sui generis. (b) A reading of Section 28 of the Customs Act, 1962, provides for recovery of duties having escaped assessment, Para 2B of which reads as under. "Where any duty has not been levied or has been short levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest may pay the amount of duty or interest before service of notice on him under sub-section (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing, who,....
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....st would be levied. This decision would hold good in cases under the Customs Act, 1962 also, when it is a simplicitor duty demand based on the re-assessment being effected read with Section 114A or otherwise. The decision of the Larger Bench in the case of Machino Montell Ltd. - 2004 (168) E.L.T. 466 (Tribunal) has followed the decision of the Honourable Karnataka High Court in case of Commissioner v. Shree Krishna Pipe Ltd. as well as the decision of the Honourable Supreme Court in case of Rashtriya Ispat Nigam Ltd. v. Commissioner - 2004 (163) E.L.T. A53. Apart from the aforesaid decision the Hon'ble Madras High Court in CCE v. Jkon Engineering (P) Ltd. - 2005 (67) RLT 157 as well as the Honourable Bombay High Court in case of CCE v. Gaurav Mercantiles Ltd. - 2005 (190) E.L.T. 11 also held similar view. Nothing contrary has been shown and in the circumstances we would uphold the applicability of the decision in the case of Machino Montell Ltd. - 2004 (168) E.L.T. 466 (Tribunal) as regards penalty under Section 114A and interest liabilities since we find that the provisions of Sections 11A and 11AC of the Central Excise Act, 1944 are pari materia, with the provisions of Sectio....
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....not imposable. Liberal view is taken once duty paid prior to issuance of SCN. I respectfully submit two fold submission. First, the side note of Section 28 clearly state "Notice for payment of duties, interest etc." It states whether show cause notice to be issued or not. In normal period of six months demand, once duty is paid then no show cause notice to be issued. This section has a rider clause. This section is not applicable in the case of fraud etc. On the contrary, it is in "NON-OBSTANTE" nature. If suppression, this does not apply. The first Explanation Section 28(2)(B2) clearly takes away or carve out such advantage. It is reproduced below. Explanation 1. - Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or the interest was not paid or was part paid or the duty or interest was erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the agent or employee of the importer or exporter. Section 28 of Customs Act, 1962 is re-produced below. 28 Notice for payment of duties, interest etc. - (1) when any duty has not been levied or has been....
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....en short levied or erroneously refunded or the interest payable which has not been paid, part paid or erroneously refunded, within a period of six months.' From the date of service of the notice on the person under sub-section (1). (2B)Where any duty has not been levied or has been short levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest, may pay the amount of duty or interest before service of notice on him under sub-section (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing who, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the duty or the interest so paid : Provided that the proper officer may determine the amount of short payment of duty or interest, if any, which in his opinion has not been paid by such person and then, the proper officer shall proceed to recover such amount in the manner specified in this section and the period of one year or six months as the case may be, referred to in sub-section (1) shall be counte....
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....the interest, may pay the amount of duty or interest before service of notice on him and inform the Department of such payment in writing when the issue of show cause notice will be waived. If the amount so paid, voluntarily by the party does not cover the entire duty or interest as may be determined by the Department, action will be initiated to recover such amount in the manner specified in Section 28 of the Customs Act, 1962 and the period of one year or six months as the case may be, referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. 2. The above benefit shall not be available in a case where the duty was not levied or was not paid or interest was not paid or was part paid or the duty or interest was erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer/exporter/agent. Further this provision shall also not apply to any case where the duty or interest had become payable or ought lo have been paid before the date on which the finance Act came into effect i.e. 11-5-2001. (P. Karthikeyan) Commissioner Is considered. The plea would not induce us to ....
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....s that Section 7(5) has to be construed to mean that the presumption contained therein is rebuttable and secondly the penalty of ten times the amount of entry tax stipulated therein is only the maximum amount which could be levied and the assessing authority has the discretion to levy lesser amount, depending upon the facts and circumstances of each case. Construing Section 7(5) in this manner the decision of the High Court that Section 7(5) in ultra vires cannot be sustained." (Emphasis supplied) We therefore cannot find the provisions of Section 114A to be read as laying down a fixed amount of penalty. Nothing contrary to this decision has been shown. Applying this law, we do not uphold the plea of Mandatory penalty is to be always imposed. 1.8 The submissions of ld. DR to the following effect is considered. It was submitted - "Hon'ble Supreme Court has held in the Revenue case that penalty is an additional tax. This is the view taken by the Apex Court in the case of C.A. Abraham v. Income Tax Officer, Kottavam - 1961 (41) ITR 425; 1961 (2) SCR 765. Apex Court concluded that "it is true that penalty proceedings under Section 28 are included in the expression....
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....umstances on account of the assessee's conduct. It may be seen that penalty is imposed as deterrent step or measure. Parliament has considered each aspect and enacted with some purpose and objective such penal provision. Further Apex Court while interpreting has concluded that penalty is an additional tax. Hence penalty imposed in the Custom Act under penal provision are in nature of additional tax. Therefore, I with utmost respect submit that paying duty prior to show cause notice issuance shall not emasculate the power or force of the law. Such act does not accrue right to declare the section otiose. Such interpretation will declare the law made by the parliament "Meaningless" "Superfluous" "Null" "Void". It will render it nugatory. The law becomes devoid of substance or force. Such interpretation is an "Abuse" of statute. Torturing of statute emasculates these provisions and renders them ineffective as a weapon for combating menace or violators. This is inconsistent with the basic premise of law. Haydon's case reported in 1584 (76) ER 637 shaped a rule of interpretation. Haydon's rule of interpretation or rule of purposive construction rega....