Custom, Excise & Service Tax Tribunal
M/S Kamakhya Steels Pvt. Ltd vs Cce, Meerut I on 11 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 11/03/2015. DATE OF DECISION : 11/03/2015. Excise Appeal No. 1949 of 2002 [Arising out of the Order-in-Original No. 07/COMMR/MRT/2002 dated 27/02/2002 passed by The Commissioner, Central Excise, Meerut.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would 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 of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Kamakhya Steels Pvt. Ltd. Appellant Versus CCE, Meerut I Respondent
Appearance Shri Rajesh Chhibber, Advocate for the Appellant.
Shri Ranjan Khanna, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 50773/2015 Dated : 11/03/2015 Per. Rakesh Kumar :-
The facts leading to filing of this appeal are, in brief, as under.
1.1 The appellant are manufacturers of mild steel ingots chargeable to Central Excise duty. The period of dispute in this case is from December 1999 to March 2000. In April 1998, they had opted for compounded levy scheme of Rule 96 ZO (3) of Central Excise Rules, 1944 under which their annual capacity of production had been determined by the Commissioner and based on that, their monthly duty liability has been fixed. However, on 27/2/99 and 4/5/99 they requested the Jurisdictional Central Excise authorities for re-determination of duty liability on actual production basis during the year 1998-1999 under Section 3A (4). The appellant, accordingly, from December 1999 onward started paying duty on actual production basis.
1.2 The Department was of the view that since in April 1998 they had opted for compounded levy scheme and thereafter they had not withdrawn their option, they would be liable to pay duty under compounded levy scheme. On this basis the Department issued a show cause notice dated 14/3/01 to the appellant for demand of differential duty of Rs. 24,00,014/- for the period from December 1999 to March 2000 under Rule 96 ZO (3) readwith Section 11A of Central Excise Act, 1944 alongwith interest on it and also for imposition of penalty of equal amount on them under Rule 96 ZO (3). The above show cause notice was adjudicated by the Commissioner, Central Excise, Meerut I vide order-in-original dated 27/2/02 by which the Commissioner confirmed the above-mentioned duty demand against the appellant alongwith interest thereon @ 18% per annum and also imposed penalty of equal amount on the appellant company under Rule 96 ZO (3) of the Central Excise Rules. The Commissioner while confirming the duty demand, observed that the assessees plea that the demand having been issued beyond the period of one year from the relevant date is time barred, is not acceptable, as in the provision of Rule 96 ZO (3) no time limit has been prescribed for demand of duty which has not been paid or has been short paid, as the scheme under Erstwhile Rule 96 ZO (3) of Central Excise Rules, 1944 is a sort of contract between the assessee and the Central Excise Department. The penalty equal to the duty demand confirmed was imposed by invoking proviso (iii) to Rule 96 ZO (3) according to which when the duty liability in respect of a month is not discharged by the assessee by the due date, penalty equal to the duty liability for that month would be imposable.
1.3 Against this order of the Commissioner, the appellant have filed an appeal before the Tribunal.
1.4 The Tribunal vide final order-in-appeal No. 61/06-CE dated 07/10/05 upheld the Commissioners order with regard to confirmation of duty demand, but reduced the penalty under Rule 96 ZO (3) to Rs. 50,000/-. The Tribunal while upholding the Commissioners order confirming of the duty demand relied upon the Apex courts judgment in the case of CCE vs. Venus Castings (P) Ltd. reported in 2000 (117) E.L.T. 273 (S.C.) and observed that in the present case the appellant during the same financial year has asked for assessment of duty under Section 3A (4) based on the actual production, which is not permissible and that the appellant in the beginning of financial year had not opted for assessment of duty under Section 3A (4) of the Central Excise Act.
1.5 Against the above order of the Tribunal, both the appellant company as well as the Department filed appeals to Honble Allahabad High Court. The appeal filed by the appellant company was disposed of by Honble High Court vide order dated 07/4/14 by which Honble High Court remanded the matter to the Tribunal for determination of the duty liability for the financial year 1999-2000. Honble High Court in the order has observed that the Tribunal has not considered the duty liability for the financial year 1999-2000 under Rule 96 ZO (3) after examining as to whether the option as required under Rule 96ZO (3) had been given by the appellant for 1999-2000.
1.6 With regard to the Departments appeal against the Tribunal order, Honble High Court vide order dated 21/11/14 remanded the matter to the Tribunal to decide the same afresh.
1.7 The matter of confirmation of duty demand remanded by the Honble High Court vide its order dated 07/4/14 was heard by this Tribunal on 22/10/14 and the Tribunal pronounced the order on 18/11/14 by which the Tribunal held that its final order dated 07/10/05 does not require any modification. However, in the order dated 18/11/14, the question of reduction of penalty, remanded by the High Court vide its order dated 21/11/14 was not examined by the Tribunal, as the Revenues appeal remanded by the High Court had not been heard by the Tribunal. It is this matter which is being heard today in these proceedings.
2. Heard both the sides.
3. Shri Rajesh Chhibber, Advocate, the learned Counsel for the appellant, pleaded that the penalty has been imposed by the Commissioner under third proviso to Rule 96 ZO (3) according to which penalty equal to the duty liability for a particular month is attracted when the duty for that month is not paid by the due date or is short paid, that for imposition of penalty, the provision of Section 11AC or the Rule 25 of the Central Excise Rules, is not invokable, that with regard to imposition of penalty under Rule 96 ZO (3), Honble Punjab & Haryana High Court in its judgment in the case of Bansal Alloys and Metals Pvt. Ltd. vs. Union of India reported in 2010 (260) E.L.T. 343 (P&H) has held that the provision in Rule 96 ZO (3) for minimum mandatory penalty even for slightest delay in payment of duty without any element of discretion is ultravires the Act and the Constitution of India, and that in view of this, there is no infirmity in the Tribunals order dated 07/10/05 reducing the penalty to Rs. 50,000/-.
4. Shri Ranjan Khanna, the learned DR, defended the Commissioners order imposing penalty equal to the duty demand pleading that the payment of duty during the period from December 1999 to March 2000 on the basis of actual production was not bonafide in as much as no intimation had been given to the Department regarding lesser payment of duty and the short payment of duty was discovered only in course of scrutiny of the RT-12 returns. He, therefore, pleaded that this amounts to suppression of relevant facts and malafide intention and hence penalty equal to the duty demand confirmed has been correctly imposed and as such the Tribunals order reducing the penalty to Rs. 50,000/- is not correct.
5. We have considered the submissions from both the sides and perused the records.
6. As stated by the learned DR, the Departmental officers came to know about short payment in course of scrutiny of the RT-12 returns for the relevant period. From this it is clear that the fact of payment of duty on actual production basis during the period from December 1999 to March 2000 had been disclosed by the appellant in their RT-12 returns. In view of this, the Departments plea that short payment was deliberate with malafide intention is incorrect. Moreover, we find that the penalty in this case equal to the duty demand confirmed has been imposed under the proviso to Rule 96 ZO (3) according to which penalty equal to duty payable is imposable when the duty in respect of a month not paid by the due date or is short paid, but this penal provision has been held to be unconstitutional by the judgment of Honble Punjab & Haryana High Court in the case of Bansal Alloys and Metals Pvt. Ltd. vs. Union of India (supra). In view of this, we do not find any infirmity in the order dated 07/10/05 of the Tribunal reducing the penalty from Rs. 24,00,000/- to Rs. 50,000/-.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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