Full Judgment
Per: Jyoti Balasundaram
In this case, the Commissioner of Central Excise had confirmed a demand of Rs. 14,48,472/- against the assessees in terms of the proviso to Section 11A of the Central Excise Act, 1944, imposed a penalty of Rs.4,97,078/- in terms of Section 11AC of the Act and Rs. 1,44,000/- under Rule 173Q of the Central Excise Rules,1944. The assessees preferred an appeal No. E/701/99 before the Tribunal, which vide its Final Order No.102/06 dated 16.02.2006, upheld the duty demand but reduced the penalty under Section 11AC to Rs. One lakh and set aside the penalty imposed under Rule 173Q. The Revenue preferred C.M.A. No. 100/07, raising the following questions of law:-
1. Whether the quantum of penalty prescribed under Section 11AC of the Central Excise Act, 1944, as equivalent to duty determined is mandatory in nature or not?
2. Whether or not the Hon ble CESTAT was not in error in setting aside fully, the penalty imposed under Rule 173 Q of the erstwhile Central Excise Rules, 1944, on the reason that it was over and above the penalty imposed under Section 11AC when factually it was imposed only on those clearances made before the date of enactment of Section 11AC i.e., 28.09.1996?
3. Whether or not the CESTAT was not in error or not charging the interest under Section 11AB of the Central Excise Act, 1944 as prayed for by the department before it atleast for the clearances made after the date of enactment of the said provision viz., 28.09.1996?
The High Court remitted the case to the Tribunal to re-consider the issue in terms of the decision of the Apex Court in UOI Vs. Dharamendra Textile Processors 2008 (306) ITR 277 and Commissioner of Central Excise, Pune Vs. SKF India Ltd. 2009 (239) ELT 385, after setting aside the order of the Tribunal. The Revenue challenged the order of the Tribunal in so far as it related to setting aside the penalty under Section 11AC, which came into force on 28.09.96, which was dismissed by the Tribunal vide Final Order No.876/04 dated 12.10.04, holding that no penalty can be imposed under Section 11AC prior to its introduction in the statute.
2. It is under the direction of the Hon’ble High Court in C.M.A. No. 100/07 dated 11.09.07, that the matter is placed before the Tribunal for a fresh decision.
3. We have heard both sides.
4. There was no challenge to the duty demand by the assessees before the High Court. Hence, we are only required to consider whether penalty equal to the duty confirmed for the period post 28.09.96, is required to be imposed and whether interest is required to be charged under Section 11AB after 28.09.96. We are also required to consider whether the assessees are liable to penalty under the provisions of Rule 173Q. Levy of interest is attracted under Section 11AB once duty has been confirmed, and by applying the proviso to Section 11A. We are therefore hold that the assessees are liable to pay interest post 28.09.96 on the duty confirmed for the period subsequent to the above mentioned date. Penalty equal to duty evaded subsequent to 28.09.96 is also required to be imposed in the light of the decision in UOI Vs. Dharamendra Textile Processors (supra). As regards penalty under Rule 173Q, as we are upholding the penalty of Rs.4,97,078/- under the provisions of Section 11AC of the Central Excise Act, we are of the view that no penalty over and above the penalty under Section 11AC is required to be imposed on the assessees.
5. In the result, the appeal is partly allowed by setting aside the penalty under Section 173 Q of the Central Excise Rules and imposing penalty equal to the duty confirmed by the authorities after 28.09.96 and hold that the assessees are liable to pay interest under Section 11AB subsequent to the date of its introduction in the statute.