Customs, Excise and Gold Tribunal - Delhi
Cce vs Machino Montell (I) Limited on 26 April, 2004
Equivalent citations: 2004(96)ECC180, 2004(168)ELT466(TRI-DEL)
ORDER
K.K. Usha, J. (President)
1. The issue raised for consideration before the Larger Bench is whether penalty under Section 11AC is liable to be imposed on the assessee or whether interest under Section 11AB is liable to be levied on duty, in cases where the duty has been deposited by the assessee before issue of show-cause notice. It is contended by the Id. counsel on behalf of the assessee that since they have deposited the duty amount before issue of show-cause notice, penalty under Section 11AC can not be imposed. In support of the above contention, reliance was placed on the following decisions of the Tribunal :
(1) Ashok Leyland Ltd. Vs. CCE, Chennai [2003 (55) RLT 816 (CEGAT-Chennai)] (2) Rashtriya Ispat Nigam Ltd Vs. CCE [2003 (161) ELT 285 (Tribunal-Bang.)]
2. The Revenue, on the other hand, submitted that when fraud, collusion or wilful mis-statement of suppression of facts, etc. are alleged against the assessee, penalty under Section 11AC can be imposed irrespective of the fact that the assessee has deposited the duty before issue of show-cause notice. In support of their contention, reliance was placed on the following there decisions :
(1) Elephanta Gases Ltd. Vs. CCE, Pune-I [2003 (155) ELT 42 (Tribunal-Mumbai)] (2) Indian Oil Blending Ltd. Vs. CCE, Kolkata-I [2002 (53) RLT 224 (CEGAT-Kol.) (3) Bharat Seats Ltd. Vs. CCE, Delhi-III [2003 (157) ELT 464 (Tribunal-Del.)]
3. It was in view of the conflicting decisions by different benches of the Tribunal, the Learned Single Member referred the matter for consideration by a Larger Bench.
4. When the case was taken-up for hearing, Id. Counsel on behalf of the respondent/assessee brought to our notice a decision of the Kernataka High Court in CCE, Mangalore Vs. Shree Krishna Pipe Industries [2004 (61) RLT 17 (Kar)] rejecting a reference application made by the Revenue against an order passed by this Tribunal holding that interest and penalty are not leviable when duty has been paid before issuance of show-cause. The relevant portion of the order reads as under :
"The Tribunal allowed the appeal by the following short order dated 23.4.2003 :
This appeal arises out of and is directed against the impugned order in appeal No. 656/2003-CE dated 28.10.2002 passed by the Commissioner of customs & Central excise (Appeals), Bangalore.
(II) Smt. Vijaya Prakash, learned Advocate appearing for the appellants submitted that the issue relates to imposition of penalty under Section 11-AC & under Rule 173 Q, apart from demand of interest in terms of Section 11-AB of the Central Excise Act, 1944. She submitted that since the disputed duty amounts has already been deposited by the party even before the issue of show cause notice, imposition of penalty is not justified. In support of her contention, she referred to the decision of the Tribunal in the case of Rashtriya Ispart Nigam Ltd. Vs. CCE, Vishakhapatnam, reported in 2003 (54) RLT 317 (CEGAT-Ban.) (III) Taking into consideration of the facts and circumstances of the case and following the ratio of the aforesaid decision of the Tribunal, we accept the contention of the party.
Accordingly, the appeal is allowed with consequential relief."
(2) Feeling aggrieved, Department has filed this petition under Section 35H of the Act seeking a direction to the Tribunal to refer the following question of law to this Court :
"(I) Whether it was correct and proper for the Tribunal to have vacated the penalties imposed under Rules 9(2), 52(A), 173(Q), 226 and 209(A) of Central Excise Rules, 1944 and Section 11AC without any justifiable or legal reason whereas the penalties were imposed in accordance with law;
(II) Whether it was correct for the Tribunal to vacate the demand for interest made in terms of valid, mandatory and explicit legal provisions contained in Section 11-AB; and (III) Whether Tribunal could pass an order without examining the issues involved, following the ratio of the case involving dissimilar facts, which has also been appealed against before Supreme Court."
(3) We may first refer to the third question. According to the petitioner, the Tribunal could not have relied on its earlier decision in Rashtriya Ispart Nigam Ltd. vs. CCE, Visakhapatnam 2003 (54) RLT 317 as the appeal filed by the Department against the said decision was pending before the Supreme Court.
(4) When the matter came up today, learned counsel for the respondent submitted that appeal filed by the Department before the Supreme Court in Civil Appeal No. D5977/2003 was dismissed by the Supreme court on 7.5.2003. He, therefore, rightly submitted that third question would not arise for consideration.
5. In so far as questions - 1 & 2 are concerned, questions are framed on the assumption that the Tribunal has granted relief without any justifiable reason. We find that Tribunal has in fact given a reason i.e. the disputed duty has been paid by the party even before the issue of show cause notice and this would show that there was no question of any fraud, misrepresentation or suppression of facts. In fact, the Tribunal in Rashtriya Ispat Nigam Ltd. case, held that where assessee deposits the duty even prior to the issue of show cause notice, penalty should not be imposed and interest should not be levied. The Supreme Court has rejected the appeal filed against the said order. Therefore, we find that order of the Tribunal is a reasoned order though brief and no question of law arises in regard to the said order. Petition is therefore dismissed."
5. The Ld Departmental Representative contended that if the ratio of the decision of the Supreme Court in Zunjarrao Bhikaji Nagarkar Vs. Union of India [1999 (112) ELT 772 (SC)] is followed, liability to pay penalty under Section 11 AC will be there if there is any violation of the provisions of the Central Excise Act or the Rules made thereunder, the fact that the assessee has paid the duty before issue of the show-cause notice will not relieve him from such liability.
6. In the light of the decision of the Karnataka High Court as referred above which considered the very same issue placed before us, it may not be possible for us to take a different view as contended by the Ld Departmental representative. It is to be noted that the Karnataka High Court has referred to the fact that the Hon'ble Supreme Court has dismissed the appeal filed by the Revenue from the decision of the Tribunal in Rashtriya Ispat Nigam Ltd. Vs. CCE, Visakhapatnam [2003 (161) ELT 285 (Tribunal-Bang.)] where identical issue was considered. In these circumstances, we follow the ratio of the decision of the karnataka High Court and hold that when the duty amount is paid by the assessee before issuance of show-cause notice, no penalty can be imposed under *Section 11A and interest demanded under *Section 11AC. Since no other issue is raised in the appeal, at the instance of the Revenue, we dismiss the appeal.