Gujarat High Court
Commissioner vs G.E on 29 July, 2011
Author: Akil Kureshi
Bench: Akil Kureshi
Gujarat High Court Case Information System
Print
TAXAP/907/2005 5/ 5 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 907 of 2005
For
Approval and Signature:
HONOURABLE
MR.JUSTICE AKIL KURESHI
HONOURABLE
MS JUSTICE SONIA GOKANI
=========================================================
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 ?
=========================================================
COMMISSIONER,
CENTRAL EXCISE & CUSTOMS - Appellant(s)
Versus
G.E.
PLASTICS INDIA LTD. - Opponent(s)
=========================================================
Appearance
:
MR
YN RAVANI for
Appellant(s) : 1,
MR PARESH M DAVE for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 29/07/2011
ORAL
JUDGMENT
(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the CESTAT dated 18th August 2004. At the time of admission of appeal, following question of law was framed:
"(1) Whether the Tribunal's order setting aside the mandatory penalty and interest especially when the intent to evade payment of duty is well established from the fact that duty amount confirmed by invoking extended period has been upheld and the duty evasion was detected by the Department and not disclosed by the assessee on their own ?
(2) Whether Tribunal could have set aside the penalty under Section 11AC & penal interest under Section 11AB which are mandatory in nature as established from the Hon'ble Finance Minister's speech, Notes on clauses and as held by Apex Court in case of Sony India Ltd., cited supra especially when the intent to evade payment of duty is proved beyond doubt ?"
2. Briefly stated, facts are that the respondent assessee was alleged to have cleared the goods of Rs.9,84,000/- without payment of Central Excise duty. There were other allegations of wrong availment of Modvat credit also. It is the case of the respondent-assessee that such duty was not paid on bonafide belief that the assessee was not required to pay the same. Be that as it may, even before the Department issued show cause notice for recovery of such unpaid dues, the dues were paid and the credit was reversed.
3. It appears that to the extent the assessee had used certain items for captive consumption without payment of duty valued at Rs.2,46,000/- Department issued show cause notice 2.7.98 under section 11AC of the Central Excise Act calling upon the assessee, to show cause why penalty equivalent to such amount of Rs.2,46,000/- be not imposed upon it. We may notice that there were certain other proposals in the said show cause notice. We, however, in the present appeal are not concerned with rest of them. The Assessing Officer and the Appellate Authority imposed penalty of Rs.2,46,000/-. Ultimately, the issue reached the Tribunal. The Tribunal by the impugned judgment deleted the penalty on the short ground that the assessee had reversed the credit even before issuance of show cause notice and therefore, no penalty should be imposed. The Tribunal relied on a decision of the Delhi Bench reported in 62 RLT 709.
4. Before us, learned counsel for the Revenue submitted that the issue is decided by the Apex Court in their favour in the case of Union of India v. Dharmendra Textile Processors, 2008 (231) ELT 3 (SC) wherein it was held that penalty under section 11AC is required to be imposed without the necessity to prove mens rea. He submitted that merely because the assessee deposited the amount before issuance of show show cause notice would not mean that there was no intention to evade duty. He submitted that credit was reversed only after the Department started investigation.
5. On the other hand, counsel for the respondents submitted that the decision in the case of Dharmendra Textile Processors (supra) has since been considered and explained by the Apex Court in the case of Union of India v. Rajasthan Spining & Weaving Mills, 2009 (238) ELT 3 (SC) and our attention was drawn to para 18, 19 and 23 of the said judgment.
6. As already recorded, the Tribunal allowed the appeal of the respondent only on the ground that the credit was reversed before the issuance of show cause notice. To our mind, by virtue of decision in the case of Dharmendra Textile Processors (supra), this cannot be the sole ground for deleting the penalty. However, in view of the decision in the case of Rajasthan Spinning & Weaving Mills (supra), explaining the decision in the case of Dharmendra Textiles, other defences of the assessee shall have to be examined. In other words, if the assessee can establish that it had sufficient reasons for not paying the duty and that there was no intention to evade duty, question of penalty under section 11AC will have to be looked from that angle.
7. In the result, the judgment of the Tribunal is set aside. The proceedings are remanded before the Tribunal for consideration of the appeal of the assessee afresh after hearing both sides, bearing in mind the observations made hereinabove and those of the Apex Court in the aforesaid cases. The appeal is disposed of accordingly.
(Akil Kureshi J.) (Ms.Sonia Gokani, J.) (vjn) Top