Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs Khandesh Extraction Ltd on 23 December, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI. APPEAL NO. E/1545/06-Mum (Arising out of Order-in-Appeal No. CEX.XI/AKD/63/NSK/APL/2006 dated 17.3.2006 passed by Commissioner (Appeals) of Central Excise & Customs, Nashik.) For approval and signature: Shri P.G Chacko, Honble 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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Commissioner of Central Excise & Customs, Nashik
Appellant(s)
Vs.
Khandesh Extraction Ltd
Respondent(s)
Appearance:
Shri P.K. Agarwal,
S.D.R.
For Appellant(s)
None
For Respondent(s)
CORAM:
Shri P.G Chacko, Honble Member (Judicial)
Date of Hearing : 23.12.2009
Date of Decision : 23.12.2009
ORDER NO.
1. In this appeal filed by the Revenue, the short question which arises for consideration is whether a penalty under Section 11AC of the Central Excise Act is liable to be imposed on the respondents on the facts of this case. There is no representation for the respondent despite notice, nor any request of theirs for adjournment.
2. The learned SDR reiterates the grounds of this appeal and relies on the following decisions:
(i) Union of India vs Dharmendra Textile Processors and Others 2008 (231) ELT 3 (SC);
(ii) Union of India vs Rajasthan Spinning and Weaving Mills 2009 (238) ELT 3 (SC);
(iii) Commissioner vs Shri Ram Aluminium Pvt Ltd 2009 (242) ELT 202 (Bom);
(iv) Commissioner vs HIM Chemicals and Fertilizers Ltd 2009-TIOL-574-HC-HP-IT.
3. The respondent had paid CVD on the goods imported by them, by making use of DEPB Credit. Subsequently they chose to take CENVAT Credit of the CVD, which was objected to by the department in a show-cause notice dated 6.10.04. However, prior to issue of this show-cause notice, the respondent paid the amount of CENVAT Credit (Rs 1,25,000/-) vide TR6 Challan No 1 dated 15.4.04 at the instance of the department. The show-cause notice proposed to appropriate this payment towards demand of the CENVAT Credit amount of Rs 1,25,000/-. It also proposed a penalty on the noticee under Rule 13 (2) of the CENVAT Credit Rules, 2002 read with Section 11AC of the Central Excise Rules. It also demanded interest on the aforesaid amount of CENVAT Credit under Rule 12 read with Section 11AB. These proposals were contested. In adjudication of the dispute, the original authority confirmed the demand of duty and appropriated the aforesaid payment towards such demand, but did not charge interest thereon under Section 11AB, nor did it impose any penalty on the party under Section 11AC. The appeal filed by the department against the adverse part of the Order-in-Original was rejected by the Commissioner (Appeals). Hence the present appeal of the Revenue.
4. Both the lower authorities took the view that, as the amount of credit was paid by the party prior to issuance of the show-cause notice, neither Section 11AB, nor Section AC was invocable against them. The learned SDR submits that this view taken by the lower authorities is contrary to the mandate of the law laid down by the Honble Supreme Court and the Honble High Courts in the cases cited above.
5. In the case of Dharmendra Textile Processors case (supra), the Honble Supreme Court held that the penalty under Section 11AC of the Act was mandatory, where one of the ingredients stipulated thereunder for such penalty was established against the assessee. In the case of Rajasthan Spinning and Weaving Mills (supra), the apex court had occasion to clarify its earlier ruling given in Dharmendra Textile Processors case (supra). The Honble Court clarified that any payment of duty (demanded under the proviso to Section 11AC of the Central Excise Act) by the assessee, prior to the show-cause notice or after issuance thereof, was immaterial insofar as the penal liability of the assessee under Section 11AC was concerned. This view was followed by the Honble High Courts in the cases cited by the learned SDR.
6. In the instant case, the show-cause notice had inter alia alleged that the noticee had deliberately availed inadmissible CENVAT Credit of CVD and suppressed this fact from the department with intent to evade duty. Accordingly, the show-cause notice invoked the proviso to Section 11A (2) of the Central Excise Act for recovery of the duty evaded, by way of appropriation of the payment already made. This demand was upheld by the original authority but its order was not challenged by the assessee. In other words, the assessee admitted the aforesaid allegation of suppression of fact and also conceded the duty liability. In the circumstances, as per the ruling of the apex court, Section 11AC was invocable against them. The lower authorities did not invoke this provision against the assessee on the ground that they had paid the amount of CENVAT Credit prior to issuance of the show-cause notice. This view flies in the face of the ruling of the apex court given in Rajasthan Spinning and Weaving Millss case (supra), wherein it was clarified that any payment of duty, before or after issue of show-cause notice, did not affect the penal liability under Section 11AC. This ruling of the apex court was appropriately followed by the Honble High Courts in similar cases.
7. Following the case law cited by the learned SDR, I set aside the decision of the lower appellate authority in relation to liability of the respondent to pay interest on duty under Section 11AB and to be penalized under Section 11AC. Accordingly, the respondent is directed to pay interest under Section 11AB on the amount of Rs 1,25,000/- for the period from the date on which the inadmissible CENVAT Credit was taken to the date on which the amount was paid. A penalty of Rs 1,25,000/- is also imposed on them under Section 11AC.
8. The appeal is allowed.
(Pronounced and dictated in the Court) (P.G. Chacko) Member (Judicial) 4