Commissioner of Central Excise Vs. Andhra Cements Limited, Durga Cement Works

Commissioner of Central Excise vs Andhra Cements Limited, Durga Cement Works

Disposition Appeal dismissed Court Andhra Pradesh Decided Apr 17, 2007

~6 min read

https://sooperkanoon.com/case/433953

For advocates & juniors · 7-day free trial

Brief this judgment before chambers

Stop skimming 50 pages - get an 18-section AI Brief on this case, ask scoped follow-ups, and find related precedents with Semantic Search. Full trial, no card required.

18-section brief - facts, issues, ratio, relief
Ask this case - answers cite the judgment
Semantic search - find precedents by meaning
Research drawer - sections, cites, related cases

Citation: sooperkanoon.com/433953
Court: Andhra Pradesh High Court
Judge: Bilal Nazki and ;Nooty, JJ.
Decided On: Apr 17, 2007
Case Number: Central Excise Appeal No. 27 of 2007
Subject: Excise
Disposition: Appeal dismissed

Case Summary

AI-generated summary - not the official court judgment text.

- ALL INDIA SERVICES ACT, 1951.Sections 8 & 11 & A.P. Buildings (Lease, Rent and Eviction) Control Rules, 1961, Rule 5: [V.V.S. Rao, G. Yethirajulu & G. Bhavani Prasad, JJ] Refusal by Landlord to receive rent - Deposit of rent in Court - Held, A tenant has the option to take recourse to Section 8 in case of refusal ...

Key legal issue: Excise
Outcome / disposition: Appeal dismissed
Acts & sections: Central Excise Act, 1944 - Sections 11, 11AB, 11AC and 11A(2); Central Excise Rules, 2002 - Rules 8(3) and 25; Central Excise Rules, 1944 - Rule 96ZP(3)

Parties & Advocates

Appellant / Petitioner

Commissioner of Central Excise

Advocate A. Rajashekar Reddy, Adv.

Respondent

Andhra Cements Limited, Durga Cement Works

Legal References

Acts: Central Excise Act, 1944 - Sections 11, 11AB, 11AC and 11A(2); Central Excise Rules, 2002 - Rules 8(3) and 25; Central Excise Rules, 1944 - Rule 96ZP(3)
Reported In: 2007(216)ELT362(AP)

Excerpt

.....(1) to (3) of rule 5. the notice to person entitled to rent and proper maintenance of accounts of such deposits under sub-rules (4) and (5) of rule 5 are solely dependent on compliance with sub-rule (3) by the tenant. the payment or deposit of rent under section 11 read with sub-rule (6) of rule 5 arises only in respect of a tenant who did not take recourse to section 8 or section 9 before an application for eviction has been made against him in respect of any rent in arrears by date of that application, whereas in respect of rent that becomes subsequently due since date of application for eviction, the tenant is bound to pay or deposit regularly until termination of proceedings in order to enable him to contest the application. any violation of section 11(1) to (3) and sub-rule (6) of rule 5 makes the tenant liable for the adverse consequences under sub-section (4) of section 11. thus, the provisions of section 11 and sub-rule (6) of rule 5 are intended only to ensure the payment and deposit of rent including arrears during pendency and till termination of proceedings for eviction. the forfeiture of right of tenant to contest in case of default is to protect the rights and interests of landlord pending such an application for eviction, but not to confer any right on tenant to plead that all defaults committed by him prior to application for eviction can never be considered wilful, if he were to deposit all arrears of rent due within fifteen days under rule 5(6) read with sub-section (1) of section 11. the object and effect of section 11 and sub-rules (1) to (5) to rule 5, the former being for protection of landlord during pendency of eviction proceedings and the later being for protection of tenant to avoid any liability for eviction on ground of wilful default. consequently, while taking recourse to section 8 by tenant is optional, once that option is exercised, compliance with sub-rules (1) to (5) of rule 5 becomes mandatory in the sense that any non-compliance..........of thirty days referred to in that proviso:provided also that where the duty determined to be payable is reduced or increased by the commissioner (appeals), the appellate tribunal or, as the case may be, the court, then, for the purposes of this section, the duty, as reduced or increased, as the case may be, shall be taken into account.provided also that in case where the duty determined to be payable is increased by the commissioner (appeals), the appellate tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect.6. as per rule 25(d) of the rules subject to the provisions of section 11ac of the act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, he is liable to pay the penalty in terms of rule 25 of the rules. a bare perusal of this rule would suggest that evasion of payment of duty is not sufficient to impose penalty on a producer or manufacturer. there should be an element of intention to evade payment of duty. unless the authorities come to a definite conclusion that there was an intention to evade the payment of duty, penalty cannot be imposed.7. in the present case, there is a finding of the tribunal that the circumstances were beyond the control of the respondent-company as the matter was pending before bifr, and as such, the amounts could not be deposited by the respondent-company within time and as soon as it was in a position to make the payment, the respondent-company made the payment not only of the duty, but also of the interest calculated under rule 8(3) of the.....

Full Judgment

1. This appeal is filed against the Final Order No. 1351 of 2006, dated 10-08-2006, passed in Appeal No. E/295/2006, on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, reversing the order in CEX-11/2005, dated 22-12-2005.

2. The respondent-company-Andhra Cements Limited is manufacturing cement and clinker, which attract duty, which was required to be discharged on a monthly basis. There was default in paying the duty on account of the unit being registered with BIFR. However, the duty along with interest was subsequently paid before a show-cause notice dated 04-01-2005 proposing to impose penalty under Rule 25 of the Central Excise Rules, 2002 (for short 'the Rules') was issued for default in paying the duty.

3. The respondent-company had in its reply to the show-cause notice submitted that since the matter is pending before BIFR, the circumstances existed were beyond it's control and therefore, the duty could not be paid in time. However, the penalty, which was imposed, was upheld by the appellant-Commissioner of Central Excise. Appeal was taken by the respondent-company before the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal reversed the orders and held that penalty could not be imposed in the present case. Therefore, this appeal has been filed by the Commissioner of Central Excise, Guntur.

4. In terms of Rule 8(3) of Rules, if the duty is not paid within time, it gives a mechanism for payment of interest on the outstanding amount of duty from the date it became due till the date on which the amount was actually paid. There is no dispute that this Rule has been followed and the interest as calculated under Rule 8(3) of the Rules has been paid.

5. However, the learned Counsel for the appellant has drawn our attention to Section 11 of the Central Excise Act, 1944 (for short 'the Act'). Section 11AC of the Act reads as under:

Penalty for short-levy or non-levy of duty in certain cases : 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 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 person who is liable to pay duty as determined under Sub-section (2) of Section 11A, shall also be liable to pay a penalty equal to the duty so determined.

Provided that where such duty as determined under Sub-section (2) of Section 11A, and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section be twenty-five per cent of the duty so determined;

Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso:

Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this Section, the duty, as reduced or increased, as the case may be, shall be taken into account.

Provided also that in case where the duty determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of duty so increased, the interest payable thereon and twenty five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect.

6. As per Rule 25(d) of the Rules subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, he is liable to pay the penalty in terms of Rule 25 of the Rules. A bare perusal of this Rule would suggest that evasion of payment of duty is not sufficient to impose penalty on a producer or manufacturer. There should be an element of intention to evade payment of duty. Unless the authorities come to a definite conclusion that there was an intention to evade the payment of duty, penalty cannot be imposed.

7. In the present case, there is a finding of the Tribunal that the circumstances were beyond the control of the respondent-company as the matter was pending before BIFR, and as such, the amounts could not be deposited by the respondent-company within time and as soon as it was in a position to make the payment, the respondent-company made the payment not only of the duty, but also of the interest calculated under Rule 8(3) of the Rules. Therefore, we have no doubt in our mind that the Tribunal has correctly interpreted Rule 25 of the Rules and the penalty could not be imposed on the respondent-company.

8. However, the learned Counsel for the petitioner has relied on a judgment of the Punjab and Haryana High Court in Commissioner of Central Excise, Delhi-III v. Machino Montell (I) Ltd. and Anr. . This judgment, as a matter of fact, is in conformity with what we have held herein above. In this judgment, it has been held that an element of evasion of duty must be present. Therefore, the Punjab and Haryana High Court remanded the matter back to the Commissioner (Appeals) for fresh decision on the question of penalty after determining the question whether the non-payment of penalty in that case at the relevant time was on account of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or the Rules made there under with intent to evade payment of duty as laid down under Section 11AC of the Act and as held by the adjudicating authority. The learned Counsel also relies on a judgment of the Allahabad High Court reported in Pee Aar Steels (P) Ltd. v. Commissioner of Central Excise, Meerut : 2004(170)ELT406(All) . In this case, Rule 96ZP(3) of the Central Excise Rules, 1944, was being interpreted by the Court and it is altogether different.

9. For the above reasons, the Appeal is dismissed. No costs.

Same Court & Year Andhra Pradesh · 2007 Same Parties Commissioner of Central Excise vs Andhra Cements Limited, Dur... Same Subject Excise Same Judge Bilal Nazki and ;Nooty, JJ. Acts & Sections Central Excise Act, 1944 - Sections 11, 11AB, 11AC and 11A(2)...

Excise