Judgment
1. When stay petition E/Stay/1515/99 come up for orders, we heard Learned Representative of the appellant and the Learned Departmental Representative on merits. On hearing the arguments in extenso, we feel that the appeal itself can be disposed of at this stage. Accordingly we are disposing of the appeal.2. Order-in-Original No.6/BRC?/MP/99 dated 25.8.99 is under challenge.
As per that order central excise duty amounting to Rs.14,36,74,091 was imposed.An identical sum was directed to be paid by way of penalty invoking the provisions contained in Section 11AC of the Central Excise Act read with rule 173Q(1) of the Rules. Interest at the rate of 20% per annum as contemplated by Section 11AB of the Central Excise Act has also been levied.
3. Appellant, Indian Oil Corporation, a Public Section Undertaking, has already paid the entire amount of duty claimed by the impugned order.
Their challenge before us is regarding propriety of imposition of penalty invoking the provisions contained in Section 11AC of the Act.
4. Committee on Disputes allowed the appellants only to question the legality of the penalty imposed on it. Minutes of the meeting of the Committee makes this position abundantly clear. For a proper understanding of the scope of this appeal we read the minutes of the Committee - The Committee noted that Indian Oil Corporation Limited had since paid the differential duty and was contesting only imposition of fine and interest in commensurate with the differential duty payable. The Committee, accordingly, reviewed its direction given in its meeting held on 16.12.99 and permitted Indian Oil Corporation Ltd. to pursue the appeal in CEGAT.Thus the only controversy pending before us is the legality of the penalty imposed by the impugned order.
5. Section 11AC came into statute book with effect from 28.9.96. Duty demanded from the appellant was for the period from April 1994 to September 1998. As per show cause notice the amount of duty evaded prior to 28.9.96 was Rs.13,90,86,359. Invoking the provisions contained in Section 11AC same amount of penalty was imposed as penalty. Since Section 11AC of the Act has no retrospective operation, Department was not justified in levying the sum of Rs.13,90,86,359 by way of penalty vide decision of the Supreme Court in CCE, Coimbatore Vs. Elgi Equipments Ltd. 2001 (128) ELT 52. After excluding that amount the penalty that has been imposed on the appellant comes to Rs.45,87,732.
Taking note of the total amount of duty evaded namely, more than Rs.14 Crores, imposition of penalty of Rs.45,87,732/- cannot be considered to be unconscionable or too harsh. In this view of the matter, penalty of Rs.45,87,732/- does not call for any interference by this Tribunal.
6. Learned Representative tried to put forth an argument that there was no evasion of duty disentitling claim of Modvat under Rule 57E of the Rules. This argument is not open to him because the legality of the imposition of duty is not open to challenge before this Tribunal by virtue of the limited scope of the appeal as expressed by the Committee on Disputes.
7. In the circumstances detailed above, we find no ground to interfere with the order impugned in this appeal regarding imposition of penalty to the tune of Rs.45,87,732/-. In other words appeal is disposed of by reducing the penalty to the tune of Rs.13,90,86,359.