Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Pune-I vs Thermax Ltd on 6 January, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT No. I
APPEAL Nos.:
1. E/2942/06 & E/CO-48/07 arising out of Order-in-Appeal No. PI/230/06 dated 8.6.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Thermax Ltd. .. Respondent
2. E/2943/06 & E/CO-41/07 arising out of Order-in-Appeal No. PI/237/06 dated 11.6.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Mather & Platt Pump Ltd. .. Respondent
3. E/2945/06 arising out of Order-in-Appeal No. PI/265/06 dated 19.7.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Sharayu Precisions .. Respondent
4. E/2947/06 & E/CO-42/07 arising out of Order-in-Appeal No. PI/239/06 dated 11.6.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Mather & Platt Pump Ltd. .. Respondent
5. E/2948/06 & E/CO-49/07 arising out of Order-in-Appeal No. PI/226/06 dated 8.6.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Thermax Ltd. .. Respondent
6. E/2949/06 & E/CO-38/07 arising out of Order-in-Appeal No. PI/235/06 dated 9.6.2006 passed by Commissioner of Central Excise (Appeals), Pune-I)
Commissioner of Central Excise, Pune-I .. Appellant
vs.
Avdhoot Paper Products .. Respondent
For approval and signature:
Hon'ble Mr. 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 :
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?
====================================================== Appearance:
Shri N.A. Sayeed, Authorised Representative (JDR), for appellant Shri J.H. Motwani, Advocate, for respondents at sr. nos. 1 & 5 Ms. Padmavati Patil, Advocate, for respondents at sr. nos. 2 & 4 Shri A.G. Kulkarni, Chartered Accountant, for respondent at sr. no. 3 None for respondent at sr. no. 6.
CORAM:
Hon'ble Mr. P.G. Chacko, Member (Judicial) Date of Hearing: 6.1.2010 Date of Decision: 6.1.2010 ORDER NO.................................
In all these appeals filed by the Revenue, the appellant prays for imposition of penalties on the respondents under Section 11AC of the Central Excise Act. In all these cases barring appeal No. E/2949/06, the respondents had taken excess CENVAT credit which was detected by the department later on. Upon such detection of wrong availment of excess credit, the respondents reversed the credits and also paid interest thereon. Subsequently, show-cause notices were issued to them. In the case of M/s. Thermax Ltd., the original authority imposed penalty equal to the amount of CENVAT credit on the assessee under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act. In the case of M/s. Mather & Platt Pump Ltd., the adjudicating authority imposed penalty on the party under Rule 15 of the CENVAT Credit Rules, 2004, without reference to Section 11AC of the Act. In the case of M/s. Sharayu Precisions, the adjudicating authority did likewise. In the remaining case of M/s. Avdhoot Paper Products (appeal No. E/2949/06), a short payment of duty by the assessee for the period 2003-04 was detected by the department during scrutiny of ER-1 returns for the said period. The differential amount of duty with interest thereon was paid by the party on 30.8.2005. Subsequently, in a show-cause notice dated 9.12.2005, the department proposed, inter alia, to impose a penalty on the respondent under Rules 25 and 27 of the Central Excise Rules, 2002 read with Section 11AC of the Act. In adjudication of this notice, the original authority imposed a penalty equal to duty on the assessee under Section 11AC of the Act.
2. In all the above cases, appeals were preferred to the Commissioner (Appeals) by the respondents and the appellate authority set aside the penalties on the ground that the CENVAT credit in question was reversed or the differential amount of duty was paid prior to issuance of show-cause notice. The learned Commissioner (Appeals) relied on the Tribunal's Larger Bench decision in CCE vs. Machino Montell (I) Ltd. 2004 (168) ELT 466 (Tri.-LB), wherein it had been held that, where duty was paid before issue of show-cause notice, there was no question of imposing any penalty under Section 11AC or of levying any interest on duty under Section 11AB of the Act. Obviously, the learned Commissioner (Appeals) presumed that the penalties imposed in all the cases by the original authority were under Section 11AC of the Act mindless of the fact that, in most of the cases, the penalties were imposed by the original authority under Rule 15, without reference to Section 11AC.
3. In most of these cases, the respondents filed written submissions styled as "cross objections". M/s. Avdhoot Paper Products, for whom there is no representation today, have also done so. The counsel for the other respondents have reiterated the respective submissions contained in the statements of cross objections. The learned JDR has reiterated the grounds of these appeals, which are in identical terms. I have considered the submissions and arguments. Case law has been cited by both sides and the same also has been considered.
4. As rightly pointed out by the learned counsel for the respondents, none of the ingredients for a penalty under Section 11AC was expressly alleged in any of the show-cause notices. It is settled law that, where the department seeks to penalize a person on any of the grounds covered by the text of Section 11AC, they have necessarily got to allege such grounds and prove the same in adjudication of the case. In the absence of allegation of fraud, collusion, suppression of facts, wilful mis-statement of facts or contravention of rules with intent to evade payment of duty by the respondents, there can be no penalty on the respondents under Section 11AC of the At. In the cases of UOI vs. Dharmendra Textile Processors 2008 (231) ELT 3 (SC) and UOI vs. Rajasthan Spinning & Weaving Mills 2009 (238) ELT 3 (SC), it was emphatically laid down by the apex court that a penalty under Section 11AC of the Act was mandatory where one or the other ingredients for such a penalty specified under that section was alleged and established by the Revenue against the person sought to be penalised. None of such ingredients was alleged by the Revenue in any of these cases, let alone proof thereof. In all these cases, the lower appellate authority proceeded on the premise that the penalties imposed by the original authority were under Section 11AC of the Act and consequently, in all these appeals of the Revenue, the appellant has raised grounds in support of their prayer for imposing penalties on the respondents under Section 11AC, though it is apparent from the record that, in most of the cases, the adjudicating authority had not imposed any penalty under Section 11AC. The prayer in these appeals for imposition of penalties on the respondents under Section 11AC cannot be granted inasmuch as none of the show-cause notices alleged anything in support of such a penalty.
5. It has been usefully argued by the learned counsel for some of the respondents that, though the show-cause notices invoked Rule 15 of the CENVAT Credit Rules, 2004, any sub-rule was not specified therein. The different sub-rules of Rule 15 cover different factual situations and, therefore, it was incumbent on the department to specify the particular sub-rule which they wanted to invoke in a particular show-cause notice. However, this was not done in any of these cases. In the case of Amrit Foods vs. CCE 2005 (190) ELT 433 (SC), the Hon'ble Supreme Court had occasion to consider a similar case which arose under Rule 173Q of the erstwhile Central Excise Rules, 1944. Their Lordships noted that Rule 173Q contained six clauses, the contents of which were not the same. It was held that it was necessary for the assessee to be put on notice as to the exact nature of contravention for which they were liable under Rule 173Q. In that case, any particular clause of Rule 173Q(1) was not specified in the show-cause notice and, on this ground, the Tribunal had set aside the penalty imposed on the assessee. The Tribunal's order was affirmed by the apex court. This decision of the apex court is in support of the respondents' case against penalty under Rule 15.
6. In the result, these appeals of the Revenue are dismissed. The cross objections are also disposed of.
(Pronounced in Court) (P.G. Chacko) Member (Judicial) tvu ??
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