Gujarat High Court
Omega Elevators vs Commissioner Of Central ... on 10 April, 2014
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/272/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 272 of 2014
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OMEGA ELEVATORS....Appellant(s)
Versus
COMMISSIONER OF CENTRAL EXCISE....Opponent(s)
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Appearance:
Mr. HARDIK B SHAH, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Ms. JUSTICE SONIA GOKANI
10th April 2014
ORAL ORDER (Per : HONOURABLE Mr. JUSTICE AKIL KURESHI)
Appellant has challenged the judgment of the Customs, Excise & Service Tax Appellate Tribunal {"CESTAT" for short} dated 18th October 2013, raising following questions for our consideration : {A} "Whether the Hon'ble CESTAT, Ahmedabad is correct in confirming the order in appeal passed by the additional commissioner of Central Excise without going into merits of the case and passing the order in stereographical manner that now amount is paid hence, evidence are not required to be examined, irrespective of the fact that the amount is paid before the show cause notice for peace of mind and avoid any penal action against proprietor of proprietary firm ?" Page 1 of 7
O/TAXAP/272/2014 ORDER
{B} "Whether in the facts and circumstances of the case, the
respondent was justified in twice recovering excise duty on the same goods supplied to end user under Section 11A of the Central Excise Act, 1944 ?"
{C} "Whether the CESTAT, Ahmedabad is correct in not giving answer to the evidence of customers excise invoice and contract produced in the appeal on merit and passing order after examining the evidence on record and just rejecting the appeal on the ground that appellant has paid the amount hence, the file is closed ?"
Adjudicating authority, after issuing a show cause notice and hearing the appellant, passed an order dated 17th October 2011 confirming the duty demand of Rs. 9,71,505/= with interest. An amount of Rs. 9,71,505/= already deposited by the appellant was appropriated towards the said confirmed duty demand. Likewise, interest of Rs. 2,14,448/= also deposited by the appellant was adjusted towards interest liability. He ordered matching penalty of Rs. 9,71,505/= under Section 11AC of the Central Excise Act, 1944. Towards such penalty, appellant had already deposited 25% ie., Rs. 2,42,877/=. Adjudicating authority ordered appropriation of such amount towards larger penalty confirmed against the appellant. In the final paragraph, however, he recorded that an option be made available to the petitioner for reduction of penalty Page 2 of 7 O/TAXAP/272/2014 ORDER under Section 11AC and since appellant had already deposited the duty determined and confirmed in this order alongwith interest, he reduced the penalty to 25% under Section 11AC of the Act.
This order the appellant challenged before the Commissioner. Commissioner {Appeals} by his order dated 14th March 2012 confirmed the view of the adjudicating authority and dismissed the appeal. In further appeal by the appellant, the Tribunal observed as under : "5. I have considered the submissions made at length by both sides and perused the records.
6. On perusal of the records, I find that the appellant herein, on being pointed out by the Audit party, has paid the differential Central Excise duty worked out by the Audit party alongwith interest on 24.03.2010. It is also noticed from the records that the appellant has paid 25% of the amount of duty as paid on 19.04.2010. In my view, having discharged the entire duty liability, interest thereof and 25% of the amount of duty as penalty, the issue should have been closed by the authorities as per the provisions of Section 11A(2B) of the Central Excise Act, 1944. It is also noticed from the adjudication order that the adjudicating authority has, while adjudicating the issue, done the very same. It have also noticed that the appellant has not strongly contested the issue on merit, but is contesting in the personal hearing before me for setting aside of the demand of penalty by the adjudicating authority of balance 75% of the duty liability. In my view, this question does not arise, as the adjudicating authority has categorically stated in the order that Page 3 of 7 O/TAXAP/272/2014 ORDER the appellant has paid 25% of the amount of the duty liability as penalty as per provisions of Section 11AC of Central Excise Act, 1944.
7. Be that as it may, in order to dispel the apprehension of the appellant herein, I hold the appellant, having discharged differential Central Excise duty, interest thereof and also 25% of the amount of duty liability, as pointed out by the Audit Party, before the issuance of show cause notice, has to be construed as conclusion of the proceeding, if any, initiated against him. In short, the appellant's appeal is disposed of, with clear direction to lower authorities that the proceedings initiated against the appellant in this case stand concluded even before the issuance of show cause notice."
From the record, it emerges that even before issuance of show cause notice, the appellant deposited duty and also 25% of the possible penalty. It was on this basis that the adjudicating authority, while confirming the duty demand with interest and also imposing penalty under Section 11AC of the Act, reduced the same to 25%. The Tribunal, in the impugned order, further clarified the issue and recorded that there shall be no further penalty against the appellant.
Appellant has, however, raised two curious submissions - Firstly, he contended that the duty and penalty was deposited under duress and that therefore, the issues should have been examined on merits by the Tribunal. Page 4 of 7
O/TAXAP/272/2014 ORDER Second contention of the appellant was that having deposited the entire duty with interest, even before issuance of the show cause notice in terms of Section 11A(2B) of the Act, no show cause notice should have been issued.
These two contentions are incongruent. If the stand of the appellant is that the duty was paid in full with interest, even before issuance of the notice and that therefore, no proceedings could have been initiated, his stand that the duty must be adjudicated on merit would not be valid. Even otherwise, the adjudicating authority as well as the Commissioner have discussed the evidence on record at a considerable length and come to the conclusion that there was clear case of clandestine removal of goods by the assessee. In that view of the matter, even the first portion of Section 11 A[2B] would not apply by virtue of Explanation 1 to the said Section. The said subsection reads as under : "11.A Recovery of duties not levied or not paid or short levied or short paid or erroneously refunded (1) xx xx (2A) xx xx (2B) Where any duty or excise has not been levied or paid or had been short levied or short paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him under subsection (1) in respect of the Page 5 of 7 O/TAXAP/272/2014 ORDER duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under subsection (1) in respect of the duty so paid.
Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his option has not been paid by such person and then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "one year" referred to in subsection (1) shall be counted from the date of receipt of such information of payment.
Explanation 1 - Nothing contained in this subsection shall apply in a case where the duty was not levied or was not paid or was short levied or was short paid or was erroneously refunded by reason of fraud, collusion or any willful mis statement 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."
In this context, we wonder, when the appellant disputed the basic duty liability by filing appeals, he could avail of reduced penalty to 25% under Section 11AC of the Act. This question, however, we need not go into since the Tribunal has already given its findings in favour of the appellant and the Revenue has not questioned the same.
In the result, Tax Appeal is dismissed.
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O/TAXAP/272/2014 ORDER
{Akil Kureshi, J.}
{Ms. Sonia Gokani, J.}
Prakash*
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