Custom, Excise & Service Tax Tribunal
M/S Raj. Spg. & Wvg. Mills Limited vs Cce, Jaipur on 21 May, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing: 21.05.2014 For Approval and Signature: Honble Mr. Justice G. Raghuram, President Honble Mr. Rakesh Kumar, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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 authorities? Excise Appeal No. 2267 of 2004 (Arising out of order-in-Original No. 43-45(RMCE/JPR-II/2004 dated 27.01.2004 passed by the Commissioner, Customs & Central Excise, Jaipur). M/s Raj. Spg. & Wvg. Mills Limited Appellant Vs. CCE, Jaipur Respondent
Appearance:
Ms. Sukriti Das, Advocate for the assessee Mr. Jayant Sahay & Mr. Jayant Sahay, DRs for the Respondent. Coram:
Honble Mr. Justice G. Raghuram, President Honble Mr. Rakesh Kumar, Member (Technical) Final Order No.52307/2014 Per: Justice G. Raghuram:
This is an assessees appeal preferred against order dated 27.01.2004 passed by the Commissioner, Customs & Central Excise, Jaipur. Three appeals were preferred before the appellate Commissioner, by the appellant herein and by two officers of the appellant namely, its Chairman and the Deputy Manager. Appeals before the lower appellate authority were preferred against the common order-in-original dated 26.09.2001 passed by the Joint Commissioner, Central Excise, Jaipur-II. The primary order confirmed Central Excise Duty demand of Rs.1,79,522/- apart from interest and penalty of an equivalent amount under Section 11AC of the Central Excise Act, 1944 (the Act) and penalties of Rs.1,000/- each on two officials of the appellant.
2. The appellant was a manufacturer of polyester/ viscose yarn, alleged to have short remitted Central Excise duty of the specified amount, during April 1996-97 to 1999-2000. Proceedings were initiated by the show cause notice dated 27.03.2001 invoking the extended period of limitation under the proviso to Section 11A(1) of the Act. The show cause notice (at para 9 thereof) specifically alleged that the appellant had suppressed / mis-declared the actual figures of forwarding charges collected on Ex-mill sales and of the depot handling charges collected, with intent to evade Excise Duty, in contravention of provisions of Section 4 of the Act (the Central Excise Act, 1944).
3. Eventually, and after due process the primary adjudication order confirmed levy of Duty, interest and penalties including penalty of an equivalent amount as the assessed liability to Duty i.e. Rs. 1,79,522/-, under Section 11AC of the Act, against the appellant herein.
4. Aggrieved by the primary order, the appellant and its officers preferred three appeals before the appellate Commissioner. The appellate Commissioner confirmed the liability to Excise Duty and to penalty under Section 11AC apart from interest leviable under Section 11AB, after recording a categoric finding that extended period of limitation was rightly invoked since the appellant had suppressed material facts from Department and this conduct legitimises invocation of the extended period (para 6 of the appellate order). The appellate Commissioner however, deleted the penalty imposed on the Chairman of the appellant herein while confirming the penalty imposed on its Deputy Manager, by the primary authority.
5. This appeal was filed in 2004. In paragraph 8 and 10 of the memorandum of appeal (set out in Form No. E.A.-3 of the Rule 6) it is stated that the appeal is preferred against the penalty imposed under Section 11AC and that relief claimed in the appeal is for deletion of penalty imposed under Section 11AC. In the statement of facts set out in the memorandum of appeal however, it is broadly asserted that the appellant is aggrieved by non consideration of its plea that in the facts and circumstances invocation of the extended period of limitation or imposition of penalty under Section 11AC of the Act, was wrong and illegal. Similarly, ground 1 of the Grounds of Appeal asserts a generic challenge that the appellate Commissioner erred in not holding that the whole proceedings were barred by limitation.
6. By an earlier order of this Tribunal dated 24.03.2006 the appeal was allowed and penalty imposed under Section 11AC by the primary Authority and confirmed by the Commissioner (Appeals), was set aside. This order clearly recorded that the appellant had filed the appeal against the impugned order of the appellate Commissioner whereby penalty of Rs.1,79,522/- was imposed. Since this order stands reversed by the judgment of Supreme Court, which has remitted the appeal on specific directions for reconsideration by us, we avoid setting out the reasons recorded by this Tribunal in the order dated 24.03.2006, for deleting the penalty.
7. Revenue preferred CEA No. 76 of 2006 before the High Court of Rajasthan at Jodhpur against the final order dated 24.03.2006. That appeal was heard alongwith a connected appeal filed by the Union of India against another assessee. Both the appeals (preferred by Union of India) were dismissed by a common judgment of the High Court dated 02.03.2007, rejecting Revenues challenge to the order of this Tribunal.
8. Revenue appealed further to the Supreme Court. Supreme Court disposed of the appeal on 12.05.2009 by its judgment reported in Union of India vs. Rajasthan Spinning & Weaving Mills 2009 (238) ELT 3 (SC). The issue before the Supreme Court was regarding the scope and ambit of Section 11AC of the Act. After adverting to and analyses of several precedents on this aspect, the Apex Court clarified that its earlier decision in Union of India vs. Dharmendra Textile Processors 2008 (231) ELT 3 (SC) must be understood to mean that though the application of Section 11AC would depend upon the existence of otherwise of the conditions expressly stated in the Section, once the Section is applicable in a case, the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. The Supreme Court set aside the order of this Tribunal dated 24.03.2006 and remitted the same for fresh consideration in accordance with law and in the light of the judgment (emphasis is added).
9. We therefore dispose of this appeal afresh but within the ambit of the issues relegated for our consideration by the order of remand. In view of the chronology of events mentioned above and in the light of the remand ordered by the Supreme Court, the singular issue that falls for our consideration, is whether the primary and appellate Authorities had erred in imposing penalty under Section 11AC on the appellant. The dispute is not as regards the quantum of penalty imposed. It is only as regards the validity of imposition per-se.
10. Appellant contended that since the earlier order dated 24.03.2006 was set aside by the Supreme Court and matter remanded to this Tribunal, all issues presented in the appeal including validity of confirmation of the liability to Excise Duty should be and are open for consideration by us. We are unable to accept this contention. Appellant alternatively contends that in adjudicating the validity of imposition of penalty (under Section 11AC) we are required to consider validity of invocation of the extended period of limitation for initiating proceedings against the appellant. For reasons to follow we are unable to accept this contention either.
11. The (impugned) order of the Commissioner (Appeals) clearly recorded the conclusion that the appellant suppressed material facts and transgressed the provisions of the Act with an intent to evade Excise Duty. On a true and fair construction of the Memorandum of Appeal, in particular the claims and reliefs sought in the appeal at paragraphs 8 and 10, the appellant has preferred the appeal only against imposition of penalty under Section 11AC; and not against assessment to Excise Duty. This inference we legitimately draw from the Memorandum of Appeal; the earlier order dated 24.03.2006 which had recorded that the appeal is preferred against the penalty component and the fact that the appellant did not challenge the correctness of this Tribunals order dated 24.03.2006 on a ground that the Tribunal failed to adjudicate upon the validity of confirmation of its Duty liability, by the primary Authority and the appellate Commissioner.
12. The conditions precedent stipulated by the relevant provisions of the Act for invocation of extended period of limitation (for initiating proceedings for levy of Duty) and for imposition of penalty under Section 11AC are in pari materia. These are, non-levy or short-levy, non-payment, short payment or erroneous refund of Duty by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder, with intent to evade payment of Duty. The requisite conditions/ ingredients for invocation of the extended period, specified in the proviso to Section 11A(1) and for imposition of penalty, specified in Section 11AC, are the same.
13. As pointed out by the Supreme Court, in the judgment reported in 2009 (238) ELT 3 (SC) (in the appellants own case and in respect of the same proceedings as before us in this appeal), where a notice under Section 11A(1) avers that the escaped Duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect, then the provision of Section 11AC would also get attracted. The Court further clarified that the penalty provision of Section 11AC would apply only after an order is passed under Section 11A(2) with a finding recorded that the escaped Duty was the result of deception by the assessee, adopting the means indicated in Section 11AC (para 18 of the Supreme Court judgment).
14. From the precedential guidance and mandate derived from the apex Court judgement (supra), we apply the principles to the facts on the order of the Commissioner (Appeals) (impugned) clearly and categorically recorded a finding that the appellant suppressed material facts to the Department; that the extended period of limitation was thus rightly invoked; that the show cause notice is not hit by limitation period; and the liability to Duty was correctly assessed by the primary Authority after legitimately invoking the extended period of limitation. Since the relevant ingredients for such invocation stand established and concluded on analyses of the factual matrix on record. This finding is a finding on facts, of the appellants conduct, legitimising invocation of the extended period (for initiation of proceedings), and this conclusion as to the appellants conduct per se establishes the statutorily stipulated ingredients, for imposition of penalty under Section 11AC as well. Imposition of penalty under Section 11AC cannot therefore be gainfully impeached, in the appeal before us, particularly in the light of the decision of the Supreme Court reported in 2009 (238) ELT 3 (SC).
15. On behalf of the appellant several decisions including of the Supreme Court in Sir Shadi Lal Sugar and General Mills Ltd. and Another vs. Commissioner of Income Tax, New Delhi - 1987 (31) ELT 325 (SC) and in CIT, West Bengal vs. Anwar Ali 1970 AIR 1982 were cited for the proposition that confirmation of the liability to tax/ Duty would not bar a challenge to the imposition of penalty and that validity of imposition of penalty could be independently challenged on germane grounds. There cannot be a quarrel with this proposition, in its abstract dimension.
16. The question however is, where the mandated ingredients for adjudication / assessment of tax/ Duty and for imposition of penalty are in pari materia and where liability to tax/ Duty was assessed on recording a conclusion by an Authority of the existence of the relevant ingredients and that assessment has attained finality, is it open to revisit the correctness of findings which formed the basis for confirmation of tax/ Duty. It is axiomatic that the order passed by either a primary or appellate Authority under the provisions of the Act; or by this Tribunal are complete orders and are operative proprio vigore; and are not unfertilised orders, which require ratification for operative efficacy.
17. In the case on hand, the show cause notice dated 27.03.2001 alleged suppression of material facts and short remittance of Duty with an intent to evade the same. This allegation was the basis for invoking the extended period of limitation, under the proviso to Section 11A(1) of the Act. The proceedings culminated in the primary adjudication order which confirmed levy of the specified quantum of deficit Excise Duty. An unsuccessful appeal against the primary order resulted in confirmation of the Duty. The appellate Authority recorded clear reasons and conclusions, as to suppression of material facts by the appellant justifying invocation of the extended period. The appeal to this Tribunal is, as earlier recorded by us herein, confined to the validity of penalty imposed under Section 11AC. The appellant did not challenge the order of this Tribunal.
18. Since the ingredients for confirmation of the Duty liability, on invoking the extended period of limitation; and for imposing penalty under the provisions of Sections 11A and 11AC, respectively, are in pari materia, in our considered view, the conclusion/finding that the appellant had suppressed material facts while under-remitting the Excise Duty, constitutes the generic integer for confirmation of penalty under Section 11AC. None of the decisions presented by the appellant expound a contrary ratio nor is any decision brought to our notice expounding the proposition that where confirmation of the liability to tax/ Duty is founded on a conclusion as to existence of ingredients which are in pari materia the ingredients for imposition of penalty as well, in a challenge to imposition of penalty alone (and when the confirmation of tax/ Duty has attained finality), the correctness of finding of suppression etc. on the basis of which the confirmation of tax/ Duty is recorded, is liable to be reconsidered.
19. On the aforesaid analyses, we find no error in the impugned order imposing penalty under Section 11AC of the Act, since the order of the appellate Commissioner confirming levy of Excise Duty, on invocation of the extended period of limitation and on the basis of the recorded finding that the appellant had suppressed relevant facts while short remitting duty, has become final.
20. The appeal fails and is dismissed, but in the circumstances without costs.
(Operative part of the order is pronounced on 21.5.2014) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) Pant 2