Chattisgarh High Court
Jaiswal Steel Processing vs Commissioner Of Central Excise & Others on 26 September, 2011
Author: Satish K. Agnihotri
Bench: Satish K. Agnihotri
HIGH COURT OF CHATTISGARH AT BILASPUR
TAX CASE NO 44 OF 2010
Jaiswal Steel Processing
...Petitioners
VERSUS
Commissioner of Central Excise & Others
...Respondents
! Shri Ashish Shrivastava Advocate for the appellant
^ Shri Bhisma Kinger Advocate for the respondents
CORAM: Honble Shri Satish K Agnihotri & Honble Shri Radhe Shyam Sharma JJ
Dated: 26/09/2011
: Judgement
(Delivered on 26th day of September, 2011)
CENTRAL EXCISE APPEAL UNDER SECTION 35-G OF
THE CENTRAL EXCISE ACT, 1944
Per SATISH K. AGNIHOTRI, J.
1. The instant appeal arises from the order No.917- 919/2009 SM (Br) dated 6th April, 2009 (Annexure - A/1) passed by the Customs, Excise & Service Tax Appellate Tribunal (for short "the CESTAT').
2. The appeal was admitted on 15th July, 2011 on the following substantial questions of law :
"(a) Whether the learned Appellate Tribunal was justified in holding vide para 4.2 of the impugned order with regard to the duty demand of 12.12 MT Pig Iron and 153.36 MT of CI scull whereas there is no notice for demand of duty for 12.12 MT of Pig Iron in the show cause notice dt. 15.02.2001 and the same is also observed by the Commissioner (Appeals) Raipur in his order in appeal dt.
29.01.2007 vide paragraph 9 and therefore held that no duty is payable under the present proceedings.
(b) Whether the imposition of penalty under Section 11- AC of the Central Excise Act, 1944 is automatic when it has been held by the Supreme Court in Commissioner of Central Excise, Chandigarh v.
Pepsi Foods Ltd. reported in (2001) 1 SCC 601 that criminal intent or "mens rea" is a necessary constituent in order to attract the penalty provision under Section 11-AC."
3. The facts, in brief, are that the appellant is a business concern and engaged in the manufacture of C.I. Socket B, C.I. Socket C, C.I. Sole Plate and C.I. Brake Block falling under Chapter Heading No.7307 and 8607 of the Schedule to the Central Excise Tariff, 1985. The officers of the Central Excise visited the factory premises of the appellant on 25th June, 1999. On visit they found that the finished goods were in excess as against its recorded balance in RG-I register maintained by the appellant. The details are as under
:
S.No Item AS per As per Weight Differe . RG 1 Panchnama nce Registe r
1. CI Socket 860 3640 30 Kg 2780 B Nos.
(83.400 )
2. Cl Socket 57 692 48 Kg 635 C Nos.
(30.480 )
3. Cl Brake 548 2377 14 Kg 1829 Block Nos. (25.605 6158 )
4. Cl Brake Nil 50 Nos. 14.2 50 Nos.
Block Kg (0.710)
97022
5. Cl Brake Nil 37 Nos. 14 Kg 37 Nos.
TPL 202 (0.520)
6. Cl Brake 3541 5250 14.2 1709
Block 289 Kg (24.780
)
165.495
MT
7. Cl Sole 10258 3945 5.5 Kg 6313
Plate
8. Cl Brake 1100 444 12.8 656
Block 605 Kg Nos.
Raw Materials
1. Pig Iron 93 MT 65 MT 28 MT
2 Cl Scull 513.580 385 MT 128.580
Scrap MT MT
3. Runner & 31 MT 31 MT Nil
Riser
a. In Form- 11.570 25.000 (-)13.430
iv
b. In RG 1
4. Block Plate 21416 21000 416 Nos.
& Clips Nos. Nos.
4. Statement of Director of the appellant company namely; Shri Vinod Kumar Jaiswal was recorded on 12th November, 1999 (Annexure - A/3). The officers again visited the factory on 18th August, 2000 and on physical verification, the materials were found as under :
Material As per Physical Remarks Records Verification Pig Iron 65.120 MT 63 12.120 (-
) CI Scull 245.995 MT 92.635 153.360 (-
Scrap )
5. First show cause notice was issued on 24th December, 1999. Thereafter, another show cause notice was issued on 15th February, 2001 (Annexure - A/4) stating the reconciliation as under :
Mater As per Shorta Position Stock Remarks ial Record ge to After as per be adjustme physica adjust nt l ed verific ation Pig 65.120 28 37.120 53 15.880 Iron (+) CI 245.99 128.58 117.415 92.635 24.780 (-
Scull 5 0 )
6. It was found that there was excess of Pig Iron and shortage of C.I. Scull Scrap. The Deputy Commissioner, Customs & Central Excise, Division-II, Bhilai, by order dated 31st August, 2006 (Annexure - A/6) held that the following finished goods were found in excess on 25th June, 1999 and were accordingly seized by the officers under panchnama dated 25th June, 1999 :
Description Excess Value Duty (@16%)
(a) C.I. Sockets (+)2780 7,25,580 1,16,093/-
`B' Nos. /-
(b) C.I. Sockets (+)635 2,64,636 42,342/-
`C' Nos. /-
(c) C.I. Brake (+)1829 2,05,305 32,849/-
Blocks Nos. /-
(d) C.I. Brake (+)50 5,900/- 944/-
Blocks Nos.
(97022)
(e) C.I. Brake (+)37 3,552/- 568/-
Blocks Nos.
(TPL202)
(f) C.I. Brake (+)1709 1,94,826 31,172/-
Blocks (289) Nos. /-
(g) C.I. Runners (+)13.430 94,010/- 15,042/-
Risers MT
Total : 14,93,80 2,39,010/-
9/-
7. In respect of shortage of 1203 Nos. of Anchor Plate (finished goods) valued at Rs.68,571/- involving duty of Rs.10,971/-, in addition to duty, a mandatory penalty of Rs.10,971/- under Section 11AC of the Central Excise Act, 1944 (for short "the Act, 1944") was imposed.
8. In respect of Pig Iron :- Pig Iron 28.000 MT valued at Rs.1,86,900/- involving duty of Rs.29,904/-
was found short of book balance. Satisfactory explanation did not come forward. Thus, the demand of duty of Rs.29,904/- was confirmed and in addition, penalty equal to the amount of duty was also imposed. Pig Iron 15.880 MT fond above book balance was confiscated being redeemed on payment of redemption fine.
9. In respect of C.I. Skull Scrap it was held that the appellant cleared 128.580 MT of C.I. Skull Scrap without payment of Central Excise Duty of Rs.1,20,865/- . Thus, the demand of duty was confirmed under Section 11A read with Rules 9 (2) & 57-I of the Central Excise Rules, 1944 (for short "the Rules, 1944") and penalty equal to the amount of duty was also imposed. However, on account of non-payment of Excise Duty on 153.360 MT of C.I. Skull Scrap, a duty to the tune of Rs.1,22,688/- and penalty to the same extent was imposed.
10. In respect of Back Plates & Clips :- Shortage of 416 Nos. of Back Plates & Clips valued at Rs.3,744/- involving duty of Rs.599/- was also found. Thus, a duty and penalty to the same extent was imposed.
11. It was further found that the appellant has contravened the provisions of Rules 9 (1), 52-A, 53, 173-F, 173-G of the Rules, 1944. Thus, the appellant was liable to pay penalty under Rule 173-Q of the Rules, 1944. Accordingly, the following order was passed :
"1 (a) The goods CI Sockets `B' - 2780 Nos.; CI Sockets `C' - 635 Nos.; CI Brake Blocks 1829 Nos.; CI Brake Blocks (97022) - 50 Nos.; CI Brake Block (TPL202) -37 Nos.; and CI Brake
Blocks (289) -1709 Nos. and CI Runner risers - valued at Rs.14,93,809/- involving Central Excise duty of Rs.2,22,687/- which was seized under panchnama on 25.6.99 at the factory premises of Noticee No. 1 is confiscated under Rule 173 Q of the erstwhile Central Excise Rules, 1944.
However, I give an option to notice No.1 to redeem the said seized goods on payment of redemption fine of Rs 3,50,000/-
2 (a) The demand of Rs.58,980/- in respect of shortages of 6313 Nos. of `CI sole plates' and 656 Nos. of `CI Brake Blocks'(605) on 25.6.99, is hereby confirmed and is ordered to be recovered from Noticee No 1 under Rule 9(2) of the Central Excise Rules, 1944 read with section 11A of the Central Excise Act, 1944.
(b) Mandatory penalty equal to amount of duty of Rs.58,980/- confirmed as above is imposed against Noticee No .1 under section 11AC of the Central Excise Act, 1944.
3(a) Duty of Rs.10,971/- on shortages of 1203 Nos. of Anchor plates valued at Rs.68,571/- as per panchama dated 18.8.2000 and show cause notice dated 15.2.2001 is confirmed and is ordered to be recovered from Noticee No. 1 under section 11A of the Central Excise Act, 1944.
(b) Mandatory penalty equal to the amount of duty of Rs. 10,971/- as above is also imposed against Noticee No. 1 under Section 11AC of the Central Excise Act, 1944.
4(a) 28 MTs of pig
iron valued at Rs
1,86,900/- have been
removed clandestinely
resulting in the shortage of the same as per Panchnama dated 25.6.99. Thus the Central Excise Duty amounting to Rs.29,904/- is hereby confirmed against Noticee No.1 and the same is ordered to be recovered from them under section 11 A of the Central Excise Act, 1944.
4 (b) Mandatory penalty equivalent to the aforesaid amount of duty confirmed viz. Rs.29,904/- as (a) above is imposed upon Noticee No.1 under Section 11AC of the Central Excise Act, 1944.
(c) 15.880 MT of Pig Iron found excess than that of recorded stock as on 18.8.2000 value at Rs.
1,15,924/- is ordered to be confiscated. However, I give an option to the noticee to redeem the same on payment of redemption fine of Rs.30,000/- (Rupees Thirty thousand only) 5(a) The demand of duty against Noticee no.1 on 128.580 MT of CI skull scrap involving Central Excise duty of Rs.1,20,865/- is confirmed and ordered to be recovered from Noticee no. under section 11 A of the Central Excise Act, 1944 read with Rule 9(2) and 57 I of the Central Excise Rules 1944.
5(b) Mandatory penalty equivalent to the aforesaid amount i.e. Rs.1,20,865/- is also imposed against Noticee no.1, under Section 11AC of the Central excise Act, 1944.
6(a) The demand of duty against Noticee no.1 on 153.360 MT of CI Skull Scrap valued at Rs.7,66,800/- found short as detailed in the Panchnama dated 18.8.2000 amounting to Rs.1,22,688/- is confirmed and is ordered to be recovered from Noticee no.1 under section 11 A of the Central Excise Act, 1944, 6(b) Mandatory penalty equal to the amount of duty confirmed above i.e. Rs.1,22,688/-
is imposed against Noticee no. 1 under section 11 AC of the Central Excise Act.
7(a) The demand of duty amounting to Rs.599/- on Back plates and clips valued at Rs. 3744/- as per panchanama dated 25.6.99 which was found short during physical verification is confirmed against Noticee no.1 and ordered to be recovered from them under Section 11 A of the Central Excise Act, 1944.
(b) Mandatory penalty equal to the amount of duty confirmed as (a) above i.e. Rs 599/-
is also imposed against Noticee no. 1 under section 11 AC of the Central Excise Act, 1944.
8. I impose a penalty of Rs 50,000/-, against Noticee no. 1 under Rule 173Q & 226 of the Central Excise Rules 1944 for contravention of various Rules as discussed above.
9. Personal Penalty of Rs 50,000/- is imposed on Shri Vinod Kumar Jaiswal, (Noticee no.2) and Director M/s Jaiswal Steel Processing Pvt.
Ltd., Bhilai under Rule 209 A of the erstwhile Central Excise Rules, 1944 as discussed above.
10. The Noticee No.1 is also liable to pay interest at applicable rates on the duty adjudged and payable & confirmed under Section 11 A in para (1) to (7) above payable in terms of section 11 AB of the Central Excise Act, 1944."
12. In appeal, before the Commissioner, Central Excise & Customs (Appeals)-II, Raipur (for short "the Commissioner (Appeals)"), the Commissioner (Appeals), by order dated 29th January, 2007 (Annexure - A/7) observed that the authorized representative was present at the time of physical verification and he expressed satisfaction about the method of determination of quantity of the goods in the factory and never protested. The Commissioner (Appeals) further observed as under :
"9..the shortages found on 18.8.2000 cannot be adjusted against the shortages of pig iron found short on 25.6.99. The shortages of pig iron as on 18.8.2000 is to be taken as 12.120 MT. But, I observe that there is no notice for demand of duty for such shortage of 12.120 MT. Therefore no duty is payable under the present proceedings. For the erroneous excess quantity of 15.880 MT determined by the lower authority, there is no question of confiscation of this quantity of pig iron. This confiscation is therefore, liable to be set aside.
10...I uphold the demand of duty of Rs.58,980/- on shortages of 6313 Nos. of C.I. sole plates and 656 Nos. of C.I. brake blocks, Rs.l0,971/- on 1203 Nos. of anchor plates found short, duty of Rs.29,904/- , on 28 MT of pig iron found short, duty of Rs.l,20,865/- on 128.580 MT of C.I. skull scrap found short, duty of Rs.1,22,688/- on 153.360 C.I. skull scrap found short and duty of Rs.599/- on back plates and clips found short. The appellants are liable to pay this amount alongwith interest. It is also seen that penalties are also imposed on the appellants under section 11 AC of the Central Excise Act as the appellants could not satisfactorily account for these shortages. Therefore, I uphold the penalties imposed under section 11AC. However, considering the facts and circumstances of the case the penalties are reduced to Rs 20,000/- from Rs 58,980/-, to Rs 4,000/- from Rs.10,971/-, to Rs 12,000/- from Rs.29,904/-
, to Rs50,000/- from
Rs,1,20,865/-, to
Rs50,000/- from
Rs1,22,688/-, to Rs.200/-
from Rs.599/-. The penalty imposed under rule 173Q for excess quantities found and penalty for non-accountal of records under rule 226 is upheld but the penalty is reduced to Rs20,000/-. Further the redemption fine is reduced Rs3,50,000/- to Rs 50,000/-. Apart from this, the confiscation of 15.880 MT of pig iron is set aside. As regards the penalty of Rs.
50,000/- imposed on the second appellant, it is observed that the second appellant has not acted independent of the appellants in this case. When that is the case, there is no question of imposition of separate penalty under rule 209A.
This penalty of Rs.50,000/- on the second appellant is set aside."
13. The CESTAT after having considered all the aspects of the matter re-examined the entire issue and came to the conclusion that in respect of shortage of goods there was no satisfactory explanation. Thus, upheld the finding recorded by the appellate authority for payment of duty along with interest in respect of shortage.
14. In regard to shortage of 12.12 MT of cenvated Pig Iron and 153.36 MT of cenvated C.I. Skull scrap discovered on 18th August, 2000, the duty demand made by the authorities below was also upheld.
15. In respect of duty demand of 28 MT of Pig Iron and 128.58 MT of C.I. scull discovered on 25th June, 1999, the CESTAT held as under :
"5..the finished goods found excess have been manufactured out of the raw-materials - Pig Iron & C.I. scull scrap found short and therefore, when the duty has demanded in respect of finished products, there is no justification for demanding duty in respect of the shortage of the raw-materials. Accordingly, the duty demand amounting to Rs. 1,50,769/- in respect of shortages of Pig Iron & C.I. scull is set aside. However since there is no explanation in respect of the shortage of 416 back plate and clips, the duty demand in respect of the same is upheld. Keeping in view the circumstances of the case, the penalty on Appellant company under Section 11AC is upheld.
6. As regards the confiscation of the finished goods and cenvated inputs found excess, since no satisfactory explanation for the same is given, the same is upheld."
Thus, the appeal was modified to the above extent.
16. We have heard learned counsel appearing for the parties, perused the pleadings and the documents appended thereto.
17. In respect of question (a), contention of Shri Shrivastava, learned counsel appearing for the appellant that the Commissioner (Appeals) has clearly found that no notice for payment of duty for shortage of 12.12 MT was issued and as such no duty was payable, is contrary to facts and the Commissioner (Appeals) had also not recorded the fact correctly.
18. A show cause notice dated 15th February, 2001 was issued to the appellant. Additional Commissioner considered the facts and held that the stock of 56.424 MT of Pig Iron and 58.575 MT of C.I. Scull valued at Rs.3,55,471/- and Rs.2,92,375/-, respectively, was held to be in excess of the adjusted recorded stock in form IV/RG.23 Part-I, was ordered to be confiscated under Rule 173Q (1) of the Rules, 1944 with option to be redeemed on redemption was passed.
19. It is evident from perusal of para 1.5 of the order dated 6th April, 2009 that on the basis of shortage of 12.12 MT vis--vis excess stock of Pig Iron and C.I. Skull Scrap a notice was issued on 15th February, 2001 for confiscation of alleged excess stock under Rule 173-Q (1) of Rules, 1944 and for imposition of penalty on them under the same Rule.
20. The show cause notice dated 15th February, 2001 is a part of the record. In the said notice it is observed as under :
"7. Now, therefore, M/s Jaiswal Steel Processing Pvt. Ltd., 178B, Light Industrial Area, Bhilai (noticee) are hereby called upon to show cause to the Additional Commissioner, Customs & Central Excise, Civil Lines, Raipur, Chhattisgarh, as to why :
(a) 15.880 MT of Pig Iron (input) seized under panchnama dtd.
15.1.2001 should not be confiscated under rule 173Q of the Central Excise Rules, 1944.
xxx xxx xxx xxx xxx xxx xxx xxx xxx
(c) The Central Excise Duty of Rs.1,22,688/-
(Rupees One Lac Twenty Two Thousand Six Hundred Eighty Eight Only) equal to the amount of cenvat credit availed on 153.36 MT C.I. Skull (input), found short during physical verification of stock on 18.8.2000 and appeared to have been removed without payment of duty in contravention of provision of Rule 57AB of Central Excise Rules, 1944 should not be confirmed and recovered under Rule 57AH of Central Excise Rules, 1944 read with Section 11A of Central Excise Act, 1944.
(d) Penalty
should not be
imposed on them
under Rule 173Q of
Central Excise
Rules, 1944, for the
violation of
provisions of Rule 9
(1), 53, 57AE and
173G of Central
Excise Rules, 1944."
21. The show cause notice includes the demand of notice and, as such, finding of the Commissioner (Appeals) was rightly not upheld by the CESTAT and the CESTAT was justified in holding that the payment in respect of shortage of 12.12 MT of cenvated Pig Iron and 153.36 MT of cenvated C.I. Skull Scrap must be re-
determined after adjusting the shortage detected in respect of this item on 25th June, 1999. Thus, the question (a) is answered affirmatively.
22. In respect of question (b), on perusal of the orders passed by the authorities below and CESTAT, it appears that there was no discussion, as no plea with regard to intention or mens rea was raised by the appellants.
23. Section 11AC of the Act, 1944 reads as under :
"11AC.-Penalty for short-levy or non-levy of duty in certain cases.-Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement 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, the person who is liable to pay duty as determined under sub-section (2) of Section 11-A, shall also be liable to pay a penalty equal to the duty so determined:
Provided that where such duty as determined under sub-section (2) of Section 11-A, and the interest payable thereon under Section 11-AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined:
Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso:
Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeal), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account:
Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeal), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect.
Explanation.-For the removal of doubts, it is hereby declared that-
(1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of Section 11-A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President;
(2) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person."
24. On bare reading of Section 11AC of the Act, 1944, it is crystal clear that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement 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, the person who is liable to pay duty as determined under sub-section (2) of Section 11- A, shall also be liable to pay a penalty equal to the duty so determined.
25. Thus, it is necessary to examine and hold that the short-levy or short-payment are willful misstatement or contravention of provisions of the Act or the rules was done with intention to evade payment of duty and for this there has to be pleadings and issues raised by the appellant or the department before the assessing authority or the appellate authority. No finding has been recorded at any stage.
26. The Supreme Court in Union of India and Others v. Dharmendra Textile Processors and Others1, observed as under :
"18. The Explanations appended to Section 271(1)(c) of the IT Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The judgment in Dilip N. Shroff case has not considered the effect and relevance of Section 276-C of the IT Act. Object behind enactment of Section 271(1)(c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the IT Act.
19. In Union Budget of 1996-1997, Section 11- AC 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. In Union of India v. Rajasthan Spinning and Weaving Mills2, wherein Dharmendra Textile Processors (supra) was considered and observed as under :
"32..From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11-AC 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. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11-AC in the manner as suggested because in that case that was not even the stand of the Revenue.
34. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11- AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the Authority concerned would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub- section (2) of Section 11-
A. That is what
Dharamendra Textile
decides. It must,
however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only insofar as Section 11-AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision."
28. In Commissioner of Central Excise, Chandigarh v.
Pepsi Foods Ltd.3, the Supreme Court observed as under
:
"21. From a perusal of the aforesaid section, especially the underlined* portion, it is clear that in order to attract the penalty provision under Section 11-AC, criminal intent or "mens rea" is a necessary constituent. In the reply to the show-cause notice the stand which has been taken by the respondent is that it has been paying the duty and there is no mala fide intention on its part to evade the payment of duty. The further stand is that the goods were cleared from the factory only on payment of duty. This stand which has been taken in the reply to the show-cause notices was not found to be incorrect in the order-in-original. As such the imposition of penalty of the equal amount of duty under the order-in-original cannot be sustained.
22. It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires "mens rea" as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible."
29. Thus, the law on this issue is well settled, as laid down by the Supreme Court in the above referred cases, that necessary ingredients for penalty under Section 11-AC of the Act, 1944 is intention of the assessee to evade payment of duty. In the case on hand, as no determination in respect of the intention to evade payment of duty or on mens rea was done, penalty cannot be imposed. The question (b) is answered accordingly.
30. For the reasons mentioned hereinabove, the imposition of penalty under Section 11-AC of the Act, 1944 without determining the necessary ingredient of intention to evade payment of duty or mens rea is quashed. However, liberty is reserved to the Department to re-determine the question of imposition of penalty after affording an opportunity of hearing to the appellant and on recording finding on the issue of intention to evade payment of duty or mens rea on the part of the appellant.
31. As an upshot, the instant tax case is allowed partly to the extent indicated above.
32. There shall be no order asto costs.
J U D G E