Gujarat High Court
Commissioner vs Sangam on 18 February, 2010
Author: K. A. Puj
Bench: K.A.Puj
Gujarat High Court Case Information System
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TAXAP/1855/2008 1/ 15 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1855 of 2008
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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COMMISSIONER
OF CENTRAL EXCISE - Appellant(s)
Versus
SANGAM
PRINTS PVT LTD - Opponent(s)
=========================================================
Appearance
:
MR
RJ OZA for
Appellant(s) : 1,
MR PARESH M DAVE for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 18/02/2010
ORAL JUDGMENT
(Per : HONOURABLE MR.JUSTICE K.A.PUJ) Leave to amend as per the draft amendment.
The Commissioner of Central Excise & Customs, Surat-I has filed this tax Appeal under Section 35G of the Central Excise Act, 1944 proposing to formulate the following substantial questions of law for determination and consideration of this Court;
(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in confirming decision of the Commissioner (Appeals) setting aside demand of interest under Section 11AB and imposition of penalty under Section 11AC without assigning any reason for the same ?
(b) Whether in the facts and circumstances of the case the Tribunal has committed substantial error of law by not allowing appeal of the Department and imposing full penalty under Section 11AC of the Act on the respondent ?
(c) Whether in the facts and circumstances of the case the Tribunal has committed substantial error of law in applying decision of the Delhi High Court in case of M/s.Marlbro Appliances P. Ltd and in the case of M/s. K.P.Pouches ?
Heard Mr. R. J. Oza, learned Standing Counsel appearing for the Revenue and perused the order passed by the authorities below.
At the time of hearing of this Tax Appeal Mr.Oza reframed the substantial questions of law which are as under :-
(a) Whether or not benefit of reduced penalty under proviso to Section 11 AC of the Central Excise Act, 1944 can be extended to such person who has not paid amount of interest determined by the adjudicating authority payable under Section 11AB of the Central Excise Act, 1944 ?
(b) Whether or not benefit of reduced penalty under proviso to Section 11AC of the Central Excise act, 1944 can be extended to such person who has paid, before issuance of show cause notice only duty determined by the adjudicating authority payable under Section 11A(2) of the Central Excise Act, 1944?
(c) Whether the adjudicating authority is statutorily obliged to set out in his order the availability of benefit of reduced penalty prescribed under proviso to Section 11AC of the Central Excise Act, 1944 and to give option to such person liable for penalty under Section 11AC of the Central Excise Act, 1944 ?
(d) Whether the impugned order made by the Tribunal can be said to be an order in accordance with law?
(e) Whether or not in the facts and circumstances of the case the Tribunal has committed substantial error of law in confirming decision of Appellate Commissioner extending benefit of reduced penalty to the extent around 25% of duty amount to the respondent ?
Mr.Oza submitted that the Tribunal has not recorded any reasons setting out facts of the case of the respondent and has mechanically passed order extending benefit of reduced penalty on the respondent. He has further submitted that the team of Central Excise Officers had carried search of the respondent's premise on 9.1.2003 and detected evasion of Central Excise duty payable by the respondent as on the date of the said search. The respondent having faced with the situation deposited the entire duty demanded prior to issuance of show cause notice. The show cause notice was issued on 2.7.2003. The adjudicating authority has passed order dated 27.2.2004 demanding duty of Rs.59,218/- and also demanded interest at the appropriate rate from the respondent under Section-11Ab of the Act and also imposed penalty of Rs.59,218/- under Section-11AC of the Central Excise Act, 1944. The respondent preferred Appeal and the Appellate Commissioner by his order dated 10.1.2005 confirmed order of duty demand made by the adjudicating authority, set aside demand of interest under Section-11AB and penalty under Section-11AC of the Act. The Department preferred Appeal against the order of the Appellate Commissioner. The Tribunal by order dated 16.5.2008 confirmed the penalty amount to 25% of the duty amount.
Mr.Oza has submitted that the respondent has not complied with the preconditions for availment of benefit of reduced penalty under proviso to Section 11AC of the Central Excise Act, 1944 and, therefore, the impugned order of the Tribunal is liable to be set aside.
Mr.Oza further submitted that the decision of the Delhi High Court in the case of K. P. Pouches (P) Ltd., reported in 2008 (228) ELT 31 (Del), cannot be applied to the case of the respondent inasmuch as in the case of K.P. Pouches (P) Ltd., (Supra) the adjudicating authority has not ordered recovery of interest under Section 11AB of the Central Excise Act, 1944 because in the said case the assessee had deposited total amount of duty payable under Section 11A(2) of the Act on the date of detection of evasion of duty itself. He has further submitted that the decision in the case of Malbro Appliances P. Ltd., reported in 2007 (208) ELT 503 (Del), also cannot be applied because the facts of the case on hand are not identical to the facts of the case of the assessee in the Malbro Appliances P. Ltd., (Supra).
On the contrary, in view of settled proposition laid down by the Punjab and Haryana Court in the case of Machino Montell (I) Ltd., reported in 2006(4) STR 177 (P & H) as well as judgments of the Apex Court in the case of Rajasthan Spinning & Weaving Mills, reported in 2009(238) ELT 3 (SC), Dharmendra Textile Processors, reported in 2008 (231) ELT 3 (SC), and decisions of the Tribunal in the case of Jawala Steels Pvt. Ltd., reported in 2009 (238) ELT 694 (Tri Kolkata), and Ponneri Steel Industries, reported in 2009 (238) ELT 295 (Tri Chennai) and such other cases, the Tribunal was required to allow department to levy penalty on the respondent for the amount equivalent to his duty liability and pass order accordingly.
Mr.Oza has further submitted that the impugned order of the Tribunal is in disregard of the law laid down by this Court in Tax Appeal No.140 of 2008 and Special Civil Application No.22931 of 2005 and such other judgments, which obligate upon the Tribunal to record cogent reasons in support of conclusion arrived at by him in passing the final order. In support of this submission Mr.Oza also relied on the following decisions (I) Coats Viyella India Ltd., Vs. Commissioner of Central Excise, 2004 (133) ELT 229 (SC)
(ii) TATA Engineering & Locomotive Co. Ltd., Vs. Collector of Central Excise, 2006 (203) ELT 360 (SC) (iii) Commissioner of Central Excise Vs. Wimco Ltd., 2007 (217) ELT 3 (SC) (iv) Commissioner of Central Exicse Vs. GTC Industries Ltd., 2008 (228) 505 (SC) (v) Commissioner of Central Excise Vs. Srikumar Agencies 2008 (232) 577 (SC) (vi) Stead Fast Paper Mills Vs. Collector of Central Excise, 1983 (12) ELT 744 (Guj.).
We have considered the submissions made by Mr.Oza and also perused very minutely the order passed by the authorities below. As a matter of fact, all these questions reframed by Mr.Oza are different facets of the main question as to whether the Tribunal is justified in reducing the penalty to 25% of the duty leviable on the respondent. All these aspects of the main question are already considered by this Court in its order dated 18.11.2009 in the case of Messers Exotic Associates Vs. Commissioner of Central Excise (Tax Appeal No.572 of 2007 with Tax Appeal No.869 of 2007 and Tax Appeal No.1942 of 2008, in the case of Commissioner of Central Exicse & Customs Vs. Rama Synsilk Mills P. Ltd., decided on 21.1.2010. This Court after considering the decision of Commissioner of Central Excise Vs. Malbro Appliances, 2007 (79) RLT 109 (Delhi), Union of India Vs. Dharmendra Textiles, 2008 (231) ELT 3 (SC), Union of India Vs. Rajasthan Spinning & Weaving Mills, 2009 (238) ELT 3 (SC), K. P. Pouches (P) Ltd., Vs. Union of India, 2008 (228) ELT 31 (Delhi), Commissioner of Central Excise, Rohtak Vs. J. R. Fabrics Pvt. Ltd., 2009 (238) ELT 209, has taken the view that the order passed by the Tribunal retaining the penalty of 25% of the duty amount seems to be quite justified. For the reasons recorded in the said two judgments, we do not feel it necessary to take any different view in this Appeal.
However, Mr.Oza has made two more submissions in this Tax Appeal. He has emphatically stated that the respondent has not complied with pre-condition for availment of benefit of reduced penalty under proviso to Section 11AC of the Central Excise Act, 1944. As per the first proviso, the duty amount was not paid with interest and even the reduced penalty of 25% is not deposited by the respondent within 30 days from the date of such determination, as required under second proviso to Section 11AC of the Act. So far as second issue is concerned, Mr.Oza submitted that the adjudicating authority is not under any statutory obligation to set out in its order the availability of benefit of reduced penalty prescribed under proviso to Section 11AC of the Central Excise Act and to give an option to such person liable for penalty under that Section. Both these issues were dealt with by this Court in Tax Appeal No.572 of 2007 with tax Appeal No.869 of 2007 decided on 18.11.2009. It is also important to note that the adjudicating authority has not calculated the interest neither in the order-in-original nor even thereafter. It is, therefore, too much to expect from the respondent assessee to pay the interest alongwith the duty amount in absence of such calculation of interest. As far as statutory obligation of the adjudicating authority is concerned, the Central Excise Department itself has issued Circular on 22.5.2008 wherein it is clarified that in all cases wherein penalty under Section 11AC of the Act is imposed the provisions contained in the first and second proviso of Section 11AC should be mandatorily mentioned in the order-in-original itself by the adjudicating authority. It is, therefore, not open for the revenue to agitate this issue before the Court in contradiction of the Circular issued by the Central Excise Department. This Court in Messers Exotic Associates (Supra) has directed the adjudicating authority to pass a fresh order giving option to the assessee to pay the duty amount within 30 days by making it explicitly clear in the order itself that if the assessee wants to avail such option he is permitted to do so. In the case on hand since the duty amount has already been paid by the respondent assessee and if the interest and/or reduced penalty of 25% were not paid by the respondent assessee, the adjudicating authority may send a communication to the respondent assessee indicating therein that the particular amount of interest and/or 25% of the penalty of the duty amount is not paid by the respondent assessee and hence if the assessee wants to avail the benefit of the reduced penalty of 25%, such amount of interest and/or penalty of 25% should be paid within 30 days from the date of receipt of such communication, failing which they would be liable to pay penalty under Section 11AC equivalent to the amount of duty.
Before parting, we observe that the order passed by the Tribunal cannot be said to be a non-speaking and non-reasoned order. The authorities cited by Mr.Oza in support of his submission that a non-speaking order is passed by the Tribunal and hence it deserves to be dismissed, were duly considered by us and we are of the view that they are not applicable to the facts of the present case. The Tribunal while dismissing the Departmental Appeal observed that the quantum of the penalty is to the extent at around 25% of the duty amount and does not call for any interference. The Tribunal is taking consistent view in the matters of penalty levied under Section 11AC and when the duty amount is paid before issuance of show cause notice, the penalty is reduced to 25% of the duty amount. If the duty amount with interest is not paid in time and even reduced penalty of 25% of the duty amount is not paid in time and option is not given to the respondent assessee, we have taken the view that such option should be given to the assessee and period of 30 days would commence from the date of giving such option. In this view of the matter, no interference is called for in the order of the Tribunal.
Subject to the above clarification this Tax Appeal stands dismissed.
( K. A. PUJ, J.) (RAJESH H. SHUKLA, J.) kks Top