Custom, Excise & Service Tax Tribunal
C.C.E., Raipur vs Sh. Deepak Agrawal - Director on 6 June, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
COURT NO. IV
Date of Hearing/decision:06.06.2013
E/2003-2005/2010- EX[SM]
C.C.E., Raipur Appellants
Vs.
M/s. Abir Steel Rolling Mills
Sh. Harikrishna Madanlal Agrawal
Sh. Deepak Agrawal - Director Respondent
[Arising out of the Order-in-Appeal No.122/RPR-I/2010 Dated 31.03.2010 passed by the Commissioner (Appeals-I) Central Excise. Raipur] Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see the :
Order for publication as per Rule 27 of the CESTAT (Procedure) Rule, 1982?
2. Whether it would be released under Rule 27 of :
the CESTAT (procedure) Rule, 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?
Appearance:-
Ms. Shweta Bector, Sh. Abhishek Jain, DR - for the Appellant Sh. Jatin Mahajan, Advocate - for the Respondent FINAL ORDER NO.56799-56801/2013 Per Rakesh Kumar :-
The fact leading to these appeals is, in brief, are under:-
1.1 M/s. Agrawal Sponge Ltd., Raipur is the manufacturer of MS Ingots. Sh. Deepak Agrawal is the Director of M/s. Agrawal Sponge Ltd. M/s. Abir Steel Rolling Mills Pvt. Ltd. is the buyer of the MS Ingots from M/s. Agrawal Sponge Ltd. and Sh. Harikrishna Madanlal Agrawal is a broker through whom the sales have been made by M/s. Agrawal Sponge Ltd. An investigation was conducted by the DGCEI Officers against M/s. Agrawal Sponge Ltd. and others. A Show Cause Notice dtd. 12.02.2009 was issued to M/s. Agrawal Sponge Ltd., Sh. Harikrishna Madanlal Agrawal and M/s. Abir Steel Rolling Mills Pvt. Ltd. for Recovery of duty amounting to Rs. 1,77,370/- along with interest from M/s. Agrawal Sponge Ltd. under proviso to Section 11A(1) of Central Excise Act in respect of 49.885 MT of M.S.Ingots alleged to have been cleared without payment of duty and also for imposition of penalty on M/s. Agrawal Sponge Ltd. under Section 11AC and the imposition of penalty under Rule 26 of Central Excise Rules, 2002 on Sh. Deepak Agrawal, Director of the M/s. Agrawal Sponge Ltd., Sh. Harikrishna Madanlal Agrawal (broker) and M/s. Abir Steel Rolling Mills Pvt. Ltd. (buyer).
1.2 M/s. Agrawal Sponge Ltd. had paid the entire disputed amount of duty along with interest and 25% of the duty towards penalty within 30 days of the issue of the Show Cause Notice, in term of the provisions of Sub-Section (1A) of Section 11A of the Central Excise Act. However, jurisdictional Assistant Commissioner still adjudicated the Show Cause Notice vide order dt.20.04.2009, confirmed the above mentioned demand along with interest and imposed penalty of equal amount on M/s. Agrawal Sponge Ltd. under Section 11AC and appropriated the amount of duty, interest and 25% penalty already paid towards the demand of duty, interest and penalty imposed. But in the same order he dropped the proceedings against Sh. Deepak Agrawal, Sh. Harikrishna Madanlal Agrawal and M/s. Abir Steel Rolling Mills Pvt. Ltd. for imposition of penalty under Rule 26 of Central Excise Rules, 2002, in view of the provisions of Sub Section (1A) & (2) of Section 11A.
1.3 The Department filed Review appeals before the Commissioner (Appeals) against dropping of the penal proceedings under Rule 26 against Sh. Deepak Agrawal, Sh. Harikrishna Madanlal Agrawal and M/s. Abir Steel Rolling Mills Pvt. Ltd. The Commissioner (Appeals) vide order dtd.13.01.2010, after considering the provisions of Sub-Section (1A)& (2) of Section 11A, dismissed the Revenues Appeals. Against this order of the Commissioner (Appeals), these three appeals has been filed by the Revenue.
2. Heard both the sides.
3. Ms. Shweta Bector, Ld. Departmental Representative, assailed the impugned order by reiterating the grounds of appeals and emphasized that just because M/s. Agrawal Sponge Ltd. had paid duty, interest and 25% of duty as penalty in terms of the provisions of Sub-Section (1A) of Section 11A, the proceedings can not be treated as concluded against the Co-noticees on whom the penalty was sought to be imposed under Rules 26 of the Central Excise Rules, 2002, as the proceedings under Section 11A and Rule 26 of Central Excise Rules, 2002 are independent. She in support of this plea relied upon the judgment of the Tribunal in case of Commissioner of Central Excise, Raipur Vs. Anand Agrawal reported in 2013 (288) ELT- 90(Tri.Del.)
4. Sh. Jatin Mahajan, ld. counsel for the Respondent, pleaded that the issue involved in this case stands decided in favour of the Respondent by the judgment of the Tribunal in case of Sonam Clock Pvt. Ltd. Vs. Commissioner of Central Excise, Rajkot reported in 2012 (278) ELT-263 and in this regard he pointed out to para 12 of the judgment. He, therefore, pleaded that there is no merit in these appeals filed by the Revenue.
4. I have considered the submissions from both the sides and perused the records. In this case there is no dispute that Show Cause Notice had been issued to M/s. Agrawal Sponge Ltd. for recovery of duty along with interest and imposition of penalty on them under Section 11AC and same Show Cause Notice also sought imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the co-noticee Sh. Deepak Agrawal Director of M/s. Agrawal Sponge Ltd., Sh. Harikrishna Madanlal Agrawal, a broker and M/s. Abir Steel Rolling Mills Pvt. Ltd., a buyer. There is no dispute that the main Noticee M/s. Agrawal Sponge Ltd. have paid the disputed amount of duty along with interest and 25% of duty as penalty within 30 days of receipt of Show Cause Notice in accordance with the provisions of Sub-Section (1A) of Section 11A. This fact has been accepted by the Assistant Commissioner and in view of this only he has dropped the penal proceedings under Rule 26 against the co-noticee Sh. Deepak Agrawal, Sh. Harikrishna Madanlal Agrawal and M/s. Abir Steel Rolling Mills Pvt. Ltd. by treating the Show Cause Notice as conclusive as to the matter stated therein, in view of the provision of Sub-Section (1A) read with provision to Sub-Section (2) of Section 11A. However, the Departments plea is that deposit of disputed amount of duty along with interest and 25% of the duty towards penalty by M/s. Agrawal Sponge Ltd., the person liable to pay the duty, within the period prescribed in sub Section (1A), would not result in the proceedings against the Respondents for imposition of penalty under Rule 26, coming to an end.
5. Sub-Section (1), (1A) & (2) of Section 11A are reproduced below.
SECTION 11A Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded-(1) When any duty of excise has not been levied or paid or had been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty or valuation of excisable goods under any other provisions of this Act or the rules made there under, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
Provided that where any duty or excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty, by such person or his agent, the provisions of this Sub-Section shall have effect, for the words, the words five years were substituted:
Explanation Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of or five years, as the case may be.
(1A) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made there under with the intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to Sub-Section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under Section 11AB and penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice.] (2) The [Central Excise Officer] shall, after considering the representation, if any, made by the person on whom notice is served under Sub-Section(1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
[Provided that if such person has paid the duty in full together with, interest and penalty under Sub-Section (1A), the proceedings in respect of such person and other persons to whom notice are served under Sub-Section (1) shall, without prejudice to the provisions of Section 9,9A and 9AA, be deemed to be conclusive as to the matter stated therein:
Provided further that, if such person has paid duty in part, interest and penalty under Sub-Section (1A), the Central Excise Officers, shall determine the amount of duty or interest not being in excess of the amount partly due from such person.]
5.1 From perusal of above provisions, it will be seen that when there is any non-levy, non-payment or short levy or short payment of duty or erroneous refund of duty, in terms of provisions of Sub Section (1) of 11A, notice for recovery of duty is to be issued to the person chargeable with duty which has not been levied or paid or which has been short levied or short paid or to whom erroneous refund has been made. When such short levy or non-levy, short payment and non-payment or erroneous refund of duty is on account of any fraud, collusion or willful mis-statement or suppression of facts or contravention of the provisions of Central Excise Act or of the Rules made there under with the intent to evade the duty by the person chargeable with duty or the persons who has received erroneous refund, this person, in accordance with the provisions of Section 11AC, in addition to the duty demand from him which may be determined under section (2) to Section 11A, also faces penalty equal to the duty demand determined under Section 11A (2) Sub-Section (1A) gives an option to the above mentioned person i.e. the person chargeable with duty which has not been levied or paid or has been short levied or short paid or to whom erroneous refund has been made, by the reason of fraud, collusion etc. on his part, to pay the entire disputed amount of duty along with interest there on payable under Section 11AB and an amount equal to 25% of the duty towards penalty, within 30 days from the date of receipt of the Show Cause Notice. In term of first proviso to Sub-Section (2) of Section 11A, if the person chargeable with duty or to whom erroneous refund has been made, discharges the duty liability along with interest and also pays 25% of the duty demanded towards penalty within the period prescribed in Sub-Section (1A), the proceedings in respect of such person and other persons to whom the Notice are served under Sub-Section (1), shall without prejudice to the provisions of Section (9), (9A) and (9AA), be deemed to be a conclusive as to the matter stated therein. There is no dispute that once the payment of the disputed amount of duty along with interest and 25% of duty towards penalty has been made by a manufacturer/ assessee in terms of Sub-Section (1A) within stipulated period, the proceedings against him shall stand concluded and as such there would be no question of the manufacturer/assessee facing penalty under section 11AC equal to the duty demand confirmed. In fact so far as a manufacturer/assessee liable to pay duty is concerned, the benefit of Sub-Section (1A) read with Sub-Section (2) of Section 11A available after issue of Show Cause Notice but before the Adjudication, is equivalent to the benefit available to him under first and second proviso to Section 11AC, which is available after conclusion of Adjudication proceedings and for which the he is required to pay duty demand confirmed along with interest and 25% of duty as penalty within 30 days from the date of communication of the Adjudication Order. Thus Sub-Section (1A) read with Sub-Section (2) of Section 11A can be treated as an additional facility given to a manufacturer/assessee to settle his tax dispute immediately after issue of the Show Cause Notice and thereby reduce the litigation involving Adjudication and appeals, besides aiding, in collection of tax dues expeditiously. The point of dispute is as to when the Show Cause Notice issued to the manufacturer/assessee for demand of duty along with interest and imposition of penalty under Section 11AC on him, also show causes other persons (co-noticees) like Directors or employees of the manufacturer/assessee company or other persons like Transporters or Customers who have dealt with the goods in respect of which either the duty liability had not been discharged or has been discharged only partly, for imposition of penalty under section 26 of the Central Excise Rules, whether the Show Cause Notice would also stand concluded in respect of the co-noticees as to the matter stated therein, when the manufacturer/assessee has paid the duty along with interest and 25% of duty on penalty within 30 days of the receipt of the Show Cause Notice.
6. The first provisos to Sub-Section (2) use the words proceedings in respect of such person and other persons to whom notice are served under Sub-Section (1). The word such person is obviously the person referred to in Sub-Section(1) as person chargeable with the duty which has not been levied or paid or which had been short levied or short paid or to whom refund has erroneous been made i.e. the person who is liable to pay the duty. The question arises as to which persons are covered by the words other persons. Though the Appellant have cited Division Benchs judgment in case of Sonam Clock Pvt. Ltd. (Supra), on going though this judgment it is seen that the same is not on the issue involved in this case. The issue decided in this case is as to whether the benefit of 1st proviso to Section 11A(2) can be extended when the assessee could not exercise the option under Section 11A(1A) within 30 days of receipt of Show Cause Notice for the reason that the Show Cause Notice did not mention the option available to the Assessee under section 11A(1A) and the Tribunal has decided this question in the favaour of the assessee. However a Coordinate Bench of this Tribunal (Single Bench) in the case of Anand Agrawal (Supra)has held that since the words such person and other persons in proviso to Sub-Section (2) are qualified by the expression to whom Notice are served in Sub-Section (1), the words other person would not cover, those persons who have been show caused by the same Show Cause Notice for imposition of penalty under Rule 26 and as such the words other persons would include only the persons from whom the duty not paid, short paid and erroneously refunded is to be recovered. With due respect, in my view, this view of the Tribunal in the case of Anand Agrawal (Supra) can not be treated as correct, as in term of Section 13 of General Clauses Act, 1897, in Central Acts and Regulations, unless there is anything repugnant in the subject or context, the words in singular shall include the plural and vice-versa and, therefore, the words such person in first proviso of Sub-Section(2) would include more than one person also if Show Cause Notice under Sub-Section (1) has been issue for recovery of duty to more than one person. Therefore the words other persons in first proviso to Sub-Section (2) have to be given a meaning different from the words such persons. Revenues contention would have been correct if the words other person were not there in 1st proviso to Section 11A(2) and in that case, there would have been no scope for doubt that on compliance with the provisions of Section (1A), only the proceedings against the person chargeable with duty would stand concluded. But since the legislature has used the words such person and other persons in 1st proviso to Section 11A(2), the words other persons have to be given a meaning, different from such person. Adopting the Revenues stand would amount to adopting a construction of the 1st proviso to Section 11A (2), which would make the words other persons redundant, which is not permissible.
6.1 In my view, therefore, the words other persons used in first proviso to Sub-Section (2) would cover the co-noticees/persons who face the allegations of contravention of Central Excise Rules, which are linked with the allegation of deliberate/fraudulent short payment, non-payment or erroneous refund of duty against the person chargeable with duty facing the duty demand i.e. the person who are alleged to have knowingly dealt with the excisable goods, liable for confiscation in the manner mentioned in Rule 26 (1) of the Central Excise Rules, 2002 and for this reason have been Show Caused for imposition of penalty under this Rule, either in the notice under section 11A (1) issued to the person chargeable with duty or by separate notices issued in this regard. This interpretation would make sense, as when the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest plus 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the Directors/employees of the manufacturer/assessee company.
6.2 For the purpose of settlement of a case, Section 31(a) of Central Excise Act, 1944, defines assessee as any person who is liable for payment of excise duty assessed under this Act or any other Act and includes any producer or manufacturer of excisable goods or a registered person under the Rules made under this Act, of a private ware house in which excisable goods are stored. Under Section 32E the assessee, in respect of a case relating to him, may make an application before the Settlement Commission for settlement of the case. Under Section 32M, every order of settlement passed under section 32F(5) shall be conclusive as to the matters stated therein and no matter covered by said order shall, save as otherwise provided in this chapter, can be reopened in any proceedings under this Act or under any other law for the time being in force. Tribunal in case of Shitala Prasad Sharma Vs. Commissioner of Central Excise, Mumbai-I, reported in 2005 (183) ELT-21 (Tri. Mumbai) relying upon Apex Courts judgment in case of Union of India Vs. Onkar S. Kanwar reported in 2002 (145) ELT- 266 (S.C.) and also the Tribunals judgment in case of D.P.Kothari reported in 2001(135) ELT-669 has held that when the matter has been settled by the settlement commission against the main party and settlement commission has granted immunity to him from penalty, the co-occured can not be penalized under Rules, 209A of Central Excise Rules, 1944 as he can not face a penalty greater than the penalty on the main accused. Same view has been expressed by the Tribunal in case of S.K. Colombowala reported in 2007 (220) ELT-492 (Tri.) with regard to settlement provisions in Customs Act, 1962. The view expressed in para 6.1 above would be in accordance with the ratio of the above mentioned judgments of the Tribunal.
6.3 The intention of Sub-Section (1A) read with Sub-Section (2) of Section 11A, as is evident from Boards Circular No. 831/08/06-EX dt. 26.07.06, is to give opportunity to manufacturer/assessee to settle his tax dispute immediately after the receipt of issue of Show Cause and thereby avoiding the litigation. The interpretation of these provisions sought by the Revenue would be contrary to this objective.
7. In view of the above discussion I hold that there is no infirmity in the impugned order. The Revenues appeals are dismissed.
(Order dictated in the open court) (Rakesh Kumar) Member(Technical) S.Kaur 13