Custom, Excise & Service Tax Tribunal
Shri. Ghanshyamdas C. Goyal vs Commissioner Of Central Excise, ... on 25 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/88235/13-MUM [Arising out of Order-in- Appeal No. AV(199-200) 180-181/2013 dtd. 18/7/2013 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
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4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
Shri. Ghanshyamdas C. Goyal
:
Appellants
VS
Commissioner of Central Excise, Aurangabad
:
Respondent
Appearance
None for the Appellants
Shri. Ashutosh Nath, Asst. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 25/2/2015
Date of decision /4/2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. AV(199-200) 180-181/2013 dtd. 18/7/2013 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad, wherein the Ld. Commissioner(Appeals) upheld the imposition of penalty of Rs. 50,000/- on the appellant under Rule 26 of the Central Excise Rules, 2002. The issue involved in this case is whether the penalty under Rule 26 on the co-appellant can be waived if main appellant against whom duty interest and penalty has been confirmed, has paid duty, interest and 25% penalty in terms of proviso to Section 11A(2).
2. None appeared on behalf of the appellant, however written submission was filed by the Counsel of the appellant and requested to decided the case on merit.
3. Shri. Ashutosh Nath, Ld. Asst. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellant has sought waiver of penalty imposed under Rule 26 of the Central Excise Rules, 2002 on the ground that in terms of proviso to Section 11A(2), if the main appellant discharged the liability of Excise duty, interest and 25% penalty then other matter of other appellant should also stand concluded. He submits that appellant as co-appellant was imposed penalty of Rs. 50,000/- under Rule 26 whereas the immunity is granted to only those other persons, who have been issued notice under Section 11A(1) therefore the interpretation of proviso by the appellant is misleading and no immunity under proviso to Section 11A(1A) can be granted to the appellant. He placed reliance on this Tribunal judgment in case of Commissioner of Central Excise, Raipur Vs. Anand Agrawal[2013(288) E.L.T. 90(Tri. Del.)].
4. I have carefully considered the submissions made by Ld. A.R. and perused the records and gone through written submissions made by the appellant.
5. The issue to be decided by me is that if the main appellant against whom the excise duty demand was raised, paid the duty, interest and 25% of penalty, whether in terms of proviso to Section 11A(2), the co-appellant can be exonerated from penalty imposed under Rule 26 of Central Excise Rules, 2002. In this regard I have read proviso to Section 11A(2) which is reproduced below:-
[Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of Sections 9, 9A and 9AA, be deemed to be conclusive as to the matter stated therein :
From the aforesaid proviso, it is very clear that the immunity provided under the proviso is available to only those persons to whom the notice is issued under Section 11A(1A). In the present case penalty on the appellant was proposed in the notice and imposed in the impugned order under Rule 26 of Central Excise Rules, 2002. Therefore the appellant is not covered under the category of the other persons as mentioned under the proviso. Therefore in my view the immunity provided under the proviso is not applicable to the present appellant. From the said proviso, I am of the opinion that the term person and any other persons used in the proviso under Section 11A(2) means if in any case in the common show cause notice, if the duty demand was raised against more than one person under Section 11A(1A) and duty interest and 25% of penalty proposed in the show cause notice is paid by both the person then against those both the persons proceedings will stand concluded, but if any other person on whom only penalty under Rule 26 of Central Excise Rules, 2002 or any other person is proposed then the proviso to Section 11A(2) is not applicable. I find that the judgments of Coordinate Bench of this Tribunal in the case of Commissioner of Central Excise, Raipur Vs. Anand Agrawal (Supra) squarely applicable in the present case. The relevant portion of the decision is reproduced below:
3.?After hearing the other sides, I find that the moot question required to be decided in the present appeals filed by the Revenue is as to whether the respondents would get the benefit of provisions of Section 11A(2) when the main manufacturer discharges his duty liability along with interest and 25% of penalty. For appreciating the said provisions the same are being reproduced below :-
SECTION 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) when any duty of excise has not been levied or paid or has been short-levied or short-paid or (erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder), a Central Excise Officer may, within [one year] 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 why he should not pay the amount specified in the notice.
[(1A).?When 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 the rules made thereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to sub-section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, an the interest payable thereon under section 11AB and penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by such person within thirty day of the receipt of the notice.] (2) The [Central Excise Officer] shall after considering the representation, if any, made by the person on whom notice is served under sub-section (1) determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
[Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of Sections 9, 9A and 9AA, be deemed to be conclusive as to the matter stated therein :
Provided further that if such person has paid duty in part, interest and penalty under sub-section (1A), the Central Excise Officers, shall determine the amount of duty or interest not being in excess of the amount partly due from such person.]
4.?Sub-section (1) of Section 11 provides for issuance of show cause notice demanding short-paid or non-paid duty within the period of either one year from the relevant date or five years where there is mis-statement or suppression of facts. Sub-section (1A) which was introduced w.e.f. 13-7-2006 gives the option to person to whom the notice is served under the proviso to sub-section (1) by Central Excise officer to pay duty in full or in part along with interest and penalty equal to the 25% of the duty within a period of 30 days of receipt of the notice. Sub-section (2) refers to a person to whom notice is served under sub-section (1). Proviso to sub-section (2) of Section 11A is to the effect that on payment of duty along with interest and penalty of 25%, proceedings in respect of such person and other persons to whom notices are serving under sub-section 1, served under Section 11 shall be deemed to be conclusive as to the matter stated therein. A combined reading of sub-section (1A), sub-section (2) and proviso to sub-section (2) of Section 11 makes it very clear that the said provisions are applicable in respect of persons to whom notice stands issued under sub-section (1) of Section 11A. Notice under sub-section 1 of Section 11A is issued to a person who has either not paid the duty or short-paid the duty. As such notice to sub-section (1) of Section 11 is issued to a manufacturing unit or a person who is required to pay-duty but has not paid the duty. Notice under sub-section (1) of Section 11 cannot be issued to independent persons who are authorised representatives of manufacturing units inasmuch as such authorised representatives are under no obligation to pay any duty of excise and as such the question of short-payment or non-payment of duty does not arise.
5.?Further when we analyze proviso to sub-section (2) of Section 11A, the same refers to conclusion of proceedings in respect of such person. Such person refer to the persons to whom notice has been served under sub-section (1) of Section 11 and who have paid the duty along with interest and 25% of penalty within a period of 30 days of receipt of the notice. Accordingly, it has to be concluded that the proceedings do not come to an end in respect of all the persons in as much as the expression used in the said proviso is only in respect of such persons and not all the noticees.
6.?I also find that the proviso to Section 2 also refers to the other persons. As such it has to be seen as to who other person can be in respect of which the proceedings would get concluded on payment of duty interest and part penalty. The said proviso does not refer to all other persons, but the same qualifies the other persons to whom notices are served under sub-section (1). As such the reference to other persons in the said proviso is not to all other persons to whom notices are served for imposition of penalty under law but are restricted to other persons to whom notices are served under sub-section (1) of Section 11A. As already observed, notices under sub-section (1) of Section 11A are served only to those persons who are required to pay duty and have either not paid duty or short-paid. Notices under sub-section 1 are not to be issued to other persons who may be employees of the manufacturing unit. As such analyzing the proviso to sub-section (2) of Section 11A, it becomes clear that the proceedings are deemed to be conclusive only in respect of such person who discharges his duty liability in terms of sub-section (1A) or to whom notices stands served under sub-section (1).
7.?Referring to the provisions of Rule 26 of Central Excise Rules, 2002, it is seen that the same prescribes for imposition of penalty in certain circumstances. For better appreciation, the said rule is re-produced below :-
RULE 26. Penalty for certain offences. - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or *[(two thousand rupees], whichever is greater.
8.?As is seen from the above, the invocation of penal provision of Rule 26 is dependent upon so many factors which are unconnected with the provisions of Section 11A. No doubt a combined show cause notice under Section 11A demanding short-paid or non-paid dues along with proposal to imposition of penalties under Rule 26 is issued but as already discussed, the two proposals are independent of each other and mutually exclusive. Rule 26 which provides for imposition of penalty in certain circumstances cannot be said to be a part of the proviso to sub-section (2) of Section 11A so as to conclude the proceedings in respect of all noticees on payment of duty, interest and part penalty by main manufacturer. The said proviso, in my views, only concludes the proceedings in respect of the persons against whom notice under Section 11A is issued and who have deposited the duty in terms of provisions of sub-section (1A) of Section 11A. As such I agree with the Revenue that payment of short paid and non-paid duty by the main manufacturer would not result in conclusion of proceedings against all other persons on whom penalty stands proposed to be imposed in terms of Rule 26. If the legislative intent was extending immunity to all connected persons, the language used would have been simpliciter in respect of all persons.
9.?I may here discuss the Boards circular relied upon by Commissioner (Appeals). Para 2 of Circular No. 831/08/2006-CX, dated 26-7-2006 reads as under :-
2.?Section 11A of the Central Excise Act, 1944 has been amended to introduce an optional scheme for enabling voluntary payment of duty by assessees in full or in part in cases involving fraud, misstatement etc. along with interest and 25% of the duty amount as penalty within 30 days of the receipt of the show cause notice thereby dispensing with the rigours of adjudication procedure. This is an additional facility given to the Trade to settle the dispute at an early stage to reduce litigation and also aid in collection of tax dues more expeditiously. The scheme is optional and not compulsory. The assessee has the further option of using the proposal facility in full or in part. In case of part payment, the remaining amount will be subject to regular proceedings as per the law.
10.?A reading of the above circular nowhere clarifies the issue as to whether payment by the main manufacturer would result in stopping of proceedings in respect of all the persons or the same would amount to settle the dispute vis-`-vis the main manufacturer only. As such nothing turns on the said Circular.
11.?In view of the foregoing discussions, I am of the view that Commissioner (Appeals)s orders allowing the appeals of respondents by extending the benefit of proviso to sub-section (2) of Section 11A are not in accordance with law. However, inasmuch as the appellate authority has not discussed the merits of the case in each and every case, the impugned orders are set aside and matter remanded for fresh decision after independently examining the role of each and every respondents and the applicability of Rule 26. Revenues appeals are allowed in above terms.
From the above findings of Anand Agrawal case, it is crystal clear that person on whom the penalty under Rule 26 was imposed is not entitled for the immunity provided under proviso to Section 11A(2) However considering the fact that total amount of duty confirmed is Rs. 2,79,803/- and also on the fact that entire duty, interest and 25% of penalty has been paid by the main appellant. I am of the view that the personal penalty of Rs. 50,000/- imposed on the appellant is higher side, therefore I reduce penalty of Rs. 50,000/- to Rs. 25,000/-. Appeal is party allowed in above terms.
(Order pronounce in court on /4/2015)
Ramesh Nair
Member (Judicial)
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