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M/S. Sakar Electronics. Vs. C.C.E. and S.T. Daman - Court Judgment

SooperKanoon Citation

Court

Customs Excise and Service Tax Appellate Tribunal CESTAT Ahmedabad

Decided On

Case Number

Appeal No.E/1170 of 2007-SM Arising Out of :OIO No.13/DEMAND/DAMAN of 2007, dt. 31.08.2007

Judge

Appellant

M/S. Sakar Electronics.

Respondent

C.C.E. and S.T. Daman

Excerpt:


.....against oio no.13/demand/daman/2007, dt. 31.08.2007 under which a penalty of rs.5,00,000/- (rupees five lakhs only) was imposed upon the appellant under rule 25 of the central excise rules, 2002 for default in making central excise duty payment, for the period from april 2003 to december 2003 and march 2004 as per the provisions of rule 8(1) and rule 8(3a) of the central excise rules, 2002. 2. shri sachin chitnis (advocate) appearing on behalf of the appellant argued that no penalty under rule 25 of the central excise rules, 2002 can be imposed upon the appellant in view of the following cases: (i). saurashtra cement ltd. vs. commissioner of c. ex., rajkot 2008 (225) elt 395 (tri. ahmd.) (ii). commissioner of c. ex. and customs vs. saurashtra cement ltd. 2010 (260) elt 71 (guj.) (iii).commissioner vs. saurashtra cement ltd. 2013 (292) elt a98 (s.c.) (iv). condor power products p. ltd. vs. commissioner of c. ex., faridabad 2007 (210) elt 137 (tri. del.) (v).commissioner vs. condor power products p. ltd. 2010 (250) elt a58 (p and h) (vi). commissioner of central excise, hyderabad vs. m/s. anjani portland cement industries ltd. 2010-tiol-1782-cestat-bang (vii). commissioner of c......

Judgment:


H.K. Thakur, J.

1. This appeal has been filed by the appellant against OIO No.13/DEMAND/DAMAN/2007, dt. 31.08.2007 under which a penalty of Rs.5,00,000/- (Rupees Five Lakhs only) was imposed upon the appellant under Rule 25 of the Central Excise Rules, 2002 for default in making Central Excise duty payment, for the period from April 2003 to December 2003 and March 2004 as per the provisions of Rule 8(1) and Rule 8(3A) of the Central Excise Rules, 2002.

2. Shri Sachin Chitnis (Advocate) appearing on behalf of the appellant argued that no penalty under Rule 25 of the Central Excise Rules, 2002 can be imposed upon the appellant in view of the following cases:

(i). Saurashtra Cement Ltd. Vs. Commissioner of C. Ex., Rajkot 2008 (225) ELT 395 (Tri. Ahmd.)

(ii). Commissioner of C. Ex. and Customs Vs. Saurashtra Cement Ltd. 2010 (260) ELT 71 (Guj.)

(iii).Commissioner Vs. Saurashtra Cement Ltd. 2013 (292) ELT A98 (S.C.)

(iv). Condor Power Products P. Ltd. Vs. Commissioner of C. Ex., Faridabad 2007 (210) ELT 137 (Tri. Del.)

(v).Commissioner Vs. Condor Power Products P. Ltd. 2010 (250) ELT A58 (P and H)

(vi). Commissioner of Central Excise, Hyderabad Vs. M/s. Anjani Portland Cement Industries Ltd. 2010-TIOL-1782-CESTAT-BANG

(vii). Commissioner of C. Ex., Allahabad Vs. R.K. Cigarettes (P) Ltd. 2007 (213) ELT 367 (Tri. - Del.)

(viii). Solar Chemferts Pvt. Ltd. Vs. Commissioner of Central Excise, Thane-I 2012 (276) ELT 273 (Tri. Mumbai)

(ix).          F.S. Engineers Vs. Commissioner of Central Excise, Ahmedabad-II 2013 (293) ELT 61 (Tri. Ahmd.)

(x).Siyaram Packaging Pvt. Ltd. Vs. Commissioner of Central Excise, Daman 2013 (292) ELT 575 (Tri. Ahmd.)

3. Shri J. Nair (A.R.) appearing on behalf of the revenue relied upon the case law of Welldone Celloplast Ltd. Vs. CCE, Delhi IV [2013 (287) ELT 141 (Tri. Del.)] and argued that penalty under Rule 25 was correctly imposed upon the appellant.

4. Heard both sides and perused the case records. It is observed that the issue involved regarding imposition of penalties for default in payments of Central Excise duty under Rule 8 of the Central Excise Rules, 2002 is no more res-integra and has been decided by the jurisdictional High Court in the case of Commissioner of Central Excise and Customs Vs. Saurashtra Cement Ltd. [2010 (260) ELT 71 (Guj.)]. While delivering this judgment Honble High Court has held as follows in para 8, 17 and 18:

8. The revenue has proposed the following substantial question of law for determination and consideration of this Court.

Whether, in the facts and circumstances of the case, the Honble Tribunal is right in holding that the respondent will attract penalty under penal provisions of Rule 27 of the Central Excise Rules, 2002 and not under Rule 25 of the Central Excise Rules, 2002, and, that, the invocation of Rule 25 of the Central Excise Rules, 2002 for imposition of penalty for delayed deposit of duty, is not in accordance with law.

17.  It is also to be borne in mind that Rule 25 starts with the word Subject to the provisions of Section 11AC............. Section 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules.

24.  In view of the above discussion and legal position emerging therefrom, we have no hesitation in confirming the orders passed by the Tribunal and dismissing all these Appeals filed by the Revenue, by holding that there was no intention on the part of the respondent assessee to evade any payment of duty. It is only because of stringent financial condition, that the duty could not be paid in time and as soon as liquidity was available, duty was paid along with interest. The Tribunal has, therefore, rightly come to the conclusion that penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to Rs. 5,000/- in each matter under Rule 27 of the Rules. We, therefore, hold that no question of law, much less any substantial question of law arises out of the orders passed by the Tribunal.

5. In view of the above, this appeal is squarely covered by the law laid down by the jurisdictional High Court in the case of Commissioner of Central Excise and Customs Vs. Saurashtra Cement Ltd. (supra). Appellant relied upon the case law Siyaram Packaging Pvt. Ltd. Vs. CCE, Daman [2013 (292) ELT 575 (Tri. Ahmd.)] to argue that penalty even under Rule 27 of the Central Excise Rules, 2002 is not imposable. In this regard, it is noted that while deciding the issue of Siyaram Packaging Pvt. Ltd. Vs. CCE, Daman (supra) the judgment of Honble High Court in the case of Commissioner of Central Excise and Customs Vs. Saurashtra Cement Ltd. (supra) was not brought to the knowledge of the bench. In view of the law laid down by the jurisdictional High Court, it is held that a penalty upto Rs.5,000/- is only imposable upon the appellant under Rule 27 of the Central Excise Rules, 2002 and is accordingly so restricted to Rs.5,000/-.

7. Appeal filed by the appellant is allowed only to the extent indicated hereinabove with consequential relief, if any.


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