Custom, Excise & Service Tax Tribunal
M/S Glaxo Smithkline Pharmaceuticals ... vs Commissioner Of Central Excise, ... on 5 November, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/418/08 (Arising out of Order-in-Appeal No. SRK/70/M-III/2008 dated 05.02.2008 passed by the Commissioner of Central Excise (Appeals), Mumbai-II). For approval and signature: Honble Shri P.G. Chacko, 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Glaxo SmithKline Pharmaceuticals Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai-II Respondent Appearance: Shri R.G. Sheth Advocate for Appellant Shri Jhamman Singh JDR for Respondent CORAM: SHRI P.G. CHACKO, MEMBER (JUDICIAL) Date of Hearing: 05.11.2009 Date of Decision: 05.11.2009 ORDER NO. WZB/MUM/2009 Per: P.G. Chacko
The short question arising for consideration in this case is whether any penalty is liable to be imposed on the appellant under Rule 25 read with Section 11AC of the Central Excise Act.
2. After examining the records, I find that this question can be considered without reference of the nature of the duty liability of the appellant. Admittedly, the appellant was liable to pay differential duty on the subject goods, which liability was conceded by them and duty paid with the interest. A show-cause notice, which proposed to appropriate such payments as also to impose penalty on the noticee under the above provisions, was contested. In adjudication of the dispute, the amounts paid by the party towards duty and interest were appropriated respectively towards payment of duty and interest. Moreover, a penalty of Rs.22,000/- was imposed on the party under Rule 25 of the Central Excise Rules, 2002 by the adjudicating authority, who observed that Section 11AC was not applicable. No appeal was preferred by the Revenue against the view taken by the original authority with regard to applicability of Section 11AC. Order of adjudication came to be sustained by the Commissioner (Appeals), who held that clause (a) of Rule 25 was attracted in the case inasmuch as the assessee had removed the goods in contravention of rules.
3. In the present appeal filed by the assessee, it is submitted that the penalty imposed under Rule 25 is arbitrary and unsustainable in law and that the said provision cannot be invoked in the absence of mens rea. It is also submitted that the show-cause notice or the Order-in-Original did not indicate existence of any evidence to show that the appellant had intent to violate any of the provisions of Central Excise Rules. According to the appellant, the above penalty was imposed merely on suspicion or assumption. Today, in an endeavour to amplify the relevant grounds of the appeal, learned Counsel submits that the show-cause notice did not allege any facts in support of Rule 25(a) and, therefore, the penalty imposed on the appellant under this provision cannot be sustained in law. It is further submitted that even clause (a) of Rule 25 was not specified in the show-cause notice. In this connection, reliance has been placed on Commissioner of Central Excise, Daman Vs. Al-Amin Exports 2007 (211) ELT 305 (Tri-Ahmd), wherein it was held that no penalty was imposable under Rule 25, where the show-cause notice did not clearly specify the relevant clause of the rule. It is pointed out that the said decision of the Tribunal was affirmed by the Honble High Court of Bombay by rejecting the departments appeal vide Commissioner of Central Excise, Daman Vs. Al-Amin Exports 2008 (232) ELT A197 (Bom). Counsel has also claimed support from Amrit Food Vs. CCE- 2005 (190) ELT 435 (SC), wherein the penalty imposed under Rule 173Q of the erstwhile Central Excise Rules, 1944 was held to be unsustainable on the ground that the relevant clause of this rule was not specified in the show-cause notice.
4. Learned DR has contested the above arguments on the strength of two High Court decisions viz. Commissioner of Customs, Amritsar Vs. ATM International 2008 (222) ELT 194 (P&H) and Commissioner of Customs, Amritsar Vs. Gurdip Singh 2009 (234) ELT 403 (P&H). In both these cases, the Honble High Court held that a mere omission to specify the relevant clause of Section 112 of the Customs Act in the show-cause notice cannot be a ground against imposition of penalty thereunder.
5. After giving careful consideration to the submissions, I find that the binding case law is to the effect that, where a provision is sought to be invoked against the assessee or other person by the department, the latter should allege the requisite facts in the show-cause notice. Thus, where Rule 25 is sought to be invoked, the department should necessarily allege the fact required for invoking the provision. For invoking clause (a) of Rule 25, the show-cause notice should allege that the noticee removed excisable goods in contravention of any of the rules or any notification issued thereunder. It goes without saying that the identity of the goods should be specified; the factum of its removal must be alleged, specific rule or notification also should be mentioned in the show-cause notice. Where this is duly done by the department, the noticee cannot resist the penalty under Rule 25 on the ground that clause (a) of the Rule 25 was not specified in the show-cause notice. This reasoning is applicable to each of the remaining clauses of Rule 25, and the same is the case with clause 112(b) of the Customs Act. In the present case, the lower authorities invoked clause (a) of Rule 25 and, therefore, it is to be examined as to whether the requisite facts were pleaded or alleged in the show-cause notice. On a perusal of the notice, I find that the requisite facts were not alleged therein.
6. In the result, the penalty gets vacated and this appeal is allowed.
(Dictated and pronounced in Court) (P.G. Chacko) Member (Judicial) Vks/ 1