Commissioner of Central Excise Vs. Jkon Engg. (P) Ltd. - Court Judgment

Excerpt:
1. the appeal by the revenue and a cross appeal by the assessee both arises from the order-in-appeal no. 61/2002, dt. 27-3-2002. before the commissioner the only question raised by the assessee was with regard to the imposition by the mandatory penalty of rs. 6,56,636/- under section 11ac of central excise act, 1944. the order-in-original had dropped the penal proceedings initiated under other provisions of the central excise act and rules. against the dropping of penal proceedings under rule 173q, the revenue had not filed any appeal before the commissioner. the commissioner in the impugned order accepted the assessee's plea that there was no intention to evade payment of duty and the duty had been paid on 16-5-2001 much before the date of issue of show cause notice dt. 25-5-2001. while setting aside the mandatory penalty under section 11ac of the act, and interest claimed under section 11ab of the act, he followed the tribunal's ruling rendered in the case of amritsar crown caps (p) ltd. v. commissioner reported in 2002 (140) e.l.t. 437 (t). however, inadvertently, he noted that the penalty imposed under rule 173q was only a nominal penalty and hence he took a lenient view to reduce the same to rs. 65,000/-. the revenue in their appeal contents that evasion of duty was on account of suppression of facts and with an intention to evade duty. therefore, the assessee should be imposed with mandatory penalty under section 11ac including interest claimed under section 11ab of the central excise act. the assessee contents that the original that the original authority had not imposed the penal proceedings under rule 173q of central excise rules. therefore, the commissioner was under a mistaken belief that there was imposition of penalty under rule 173q and an order to reduce the same has been passed by taking a lenient view, which did not arise at all. hence, the assessee pleads for setting aside this portion of the order of the commissioner.2. ld. sdr smt. r. bhagyavati argued on behalf of the revenue and id.advocate, shri m. venkatraman, on behalf of the respondent.3. ld. sdr submitted that the mandatory penalty was clearly imposable as the assessee had admitted their offence of clearing the goods beyond the exemption limit under the ssi notification. there was no question of bonafide belief, as they had paid the sales tax and ought to have paid the excise duty. since suppression was established and there was intention to evade duty, therefore, mandatory penalty was clearly imposable. ld. sdr pointed out to the citations referred in the memo appeal and prayed for setting aside the commissioner (appeal)'s order, insofar as non-imposing mandatory penalty is concerned. so far as cross appeal is concerned, id. sdr reiterated the commissioner (appeals)'s findings.4. ld. counsel submitted that the id. commissioner had followed the tribunal ruling rendered in the case of amristar crown caps (p) ltd., which has been followed by this bench also and he filed a copy of final order no. 1169/2002, dt. 18-10-2002 rendered in the case of cce, trichy v. sundaram industries wherein the tribunal has up held the commissioner (appeal)'s order to set aside the penalty under situation where the duty has been paid even before the issue of show cause notice. he contents that the judgment of amristar crown caps (p) ltd. (supra) has been rendered after due consideration of several other judgments and that this view has been followed in large number of cases by all benches. he further submits that the commissioner has committed an error in holding that the penalty under rule 173q is imposable and reducing the same by taking a lenient view. he pointed out the order-in-original no. v/73/15/209/2001 adjn., dt. 28-2-2002, wherein the addl. commissioner had dropped the penal proceedings initiated under other provisions of the central excise rules. he further pointed out that as there was no imposition of penalty under rule 173q, therefore, the commissioner fell in error in holding that the original authority had imposed penalty under rule 173q. therefore, he prays for allowing the cross appeal by set aside this portion of the commissioner (appeals)'s order.5. i have carefully considered the submissions and perused the records.the revenue has aggrieved with that portion of the commissioner (appeals)'s order setting aside the mandatory penalty and interest imposed by the original authority under sections 11ac of the act and 11ab of the act respectively, solely on the ground, that the duty had been paid on 16-5-2001, prior to the issue of show cause notice on 25-5-2001. in this regard, he has followed the ratio of the tribunal ruling rendered in the case of amristar crown caps (p) ltd. (supra), wherein the tribunal has held that where the duty has been paid before the issue of show cause notice, then in that event penalty under section 11 ac and interest claimed under section 11ab is not invocable.the ratio of this judgment has been followed by this southern regional bench in the case of cce, trichy v. sundaram industries (supra). in view of this position, i do not find any merit in the revenue appeal and the same is rejected.6. inasfar as the cross appeal is concerned, there is merit in their case. the order-in-original clearly dropped penal proceedings initiated under the other provisions of the act and rules. therefore, the commissioner was under a mistaken belief that there was penalty imposed also under rule 173q of the rules. therefore, there was no question of reducing the same. the error is apparent on record and therefore the contention of the assessee in the cross appeal is accepted and the commissioner (appeal)'s order confirming the penalty of rs. 65,000/- under rule 173q is set aside by allowing the cross appeal.7. both the appeals are disposed of in the above terms. ordered accordingly.

Judgment:
1. The appeal by the Revenue and a cross appeal by the assessee both arises from the Order-in-Appeal No. 61/2002, dt. 27-3-2002. Before the Commissioner the only question raised by the assessee was with regard to the imposition by the mandatory penalty of Rs. 6,56,636/- under Section 11AC of Central Excise Act, 1944. The order-in-original had dropped the penal proceedings initiated under other provisions of the Central Excise Act and Rules. Against the dropping of penal proceedings under Rule 173Q, the Revenue had not filed any appeal before the Commissioner. The Commissioner in the impugned order accepted the assessee's plea that there was no intention to evade payment of duty and the duty had been paid on 16-5-2001 much before the date of issue of show cause notice dt. 25-5-2001. While setting aside the mandatory penalty under Section 11AC of the Act, and interest claimed under Section 11AB of the Act, he followed the Tribunal's ruling rendered in the case of Amritsar Crown Caps (P) Ltd. v. Commissioner reported in 2002 (140) E.L.T. 437 (T). However, inadvertently, he noted that the penalty imposed under Rule 173Q was only a nominal penalty and hence he took a lenient view to reduce the same to Rs. 65,000/-. The Revenue in their appeal contents that evasion of duty was on account of suppression of facts and with an intention to evade duty. Therefore, the assessee should be imposed with mandatory penalty under Section 11AC including interest claimed under Section 11AB of the Central Excise Act. The assessee contents that the original that the original authority had not imposed the penal proceedings under Rule 173Q of Central Excise Rules. Therefore, the Commissioner was under a mistaken belief that there was imposition of penalty under Rule 173Q and an order to reduce the same has been passed by taking a lenient view, which did not arise at all. Hence, the assessee pleads for setting aside this portion of the order of the Commissioner.

2. Ld. SDR Smt. R. Bhagyavati argued on behalf of the Revenue and Id.

Advocate, Shri M. Venkatraman, on behalf of the respondent.

3. Ld. SDR submitted that the mandatory penalty was clearly imposable as the assessee had admitted their offence of clearing the goods beyond the exemption limit under the SSI Notification. There was no question of bonafide belief, as they had paid the sales tax and ought to have paid the excise duty. Since suppression was established and there was intention to evade duty, therefore, mandatory penalty was clearly imposable. Ld. SDR pointed out to the citations referred in the memo appeal and prayed for setting aside the Commissioner (Appeal)'s order, insofar as non-imposing mandatory penalty is concerned. So far as cross appeal is concerned, Id. SDR reiterated the Commissioner (Appeals)'s findings.

4. Ld. Counsel submitted that the Id. Commissioner had followed the Tribunal ruling rendered in the case of Amristar Crown Caps (P) Ltd., which has been followed by this Bench also and he filed a copy of Final Order No. 1169/2002, dt. 18-10-2002 rendered in the case of CCE, Trichy v. Sundaram Industries wherein the Tribunal has up held the Commissioner (Appeal)'s order to set aside the penalty under situation where the duty has been paid even before the issue of show cause notice. He contents that the judgment of Amristar Crown Caps (P) Ltd. (supra) has been rendered after due consideration of several other judgments and that this view has been followed in large number of cases by all benches. He further submits that the Commissioner has committed an error in holding that the penalty under Rule 173Q is imposable and reducing the same by taking a lenient view. He pointed out the Order-in-Original No. V/73/15/209/2001 Adjn., dt. 28-2-2002, wherein the Addl. Commissioner had dropped the penal proceedings initiated under other provisions of the Central Excise Rules. He further pointed out that as there was no imposition of penalty under Rule 173Q, therefore, the Commissioner fell in error in holding that the original authority had imposed penalty under Rule 173Q. Therefore, he prays for allowing the cross appeal by set aside this portion of the Commissioner (Appeals)'s order.

5. I have carefully considered the submissions and perused the records.

The Revenue has aggrieved with that portion of the Commissioner (Appeals)'s order setting aside the mandatory penalty and interest imposed by the original authority under Sections 11AC of the Act and 11AB of the Act respectively, solely on the ground, that the duty had been paid on 16-5-2001, prior to the issue of show cause notice on 25-5-2001. In this regard, he has followed the ratio of the Tribunal ruling rendered in the case of Amristar Crown Caps (P) Ltd. (supra), wherein the Tribunal has held that where the duty has been paid before the issue of show cause notice, then in that event penalty under Section 11 AC and interest claimed under Section 11AB is not invocable.

The ratio of this judgment has been followed by this Southern Regional Bench in the case of CCE, Trichy v. Sundaram Industries (supra). In view of this position, I do not find any merit in the Revenue appeal and the same is rejected.

6. Inasfar as the cross appeal is concerned, there is merit in their case. The order-in-original clearly dropped penal proceedings initiated under the other provisions of the Act and Rules. Therefore, the Commissioner was under a mistaken belief that there was penalty imposed also under Rule 173Q of the Rules. Therefore, there was no question of reducing the same. The error is apparent on record and therefore the contention of the assessee in the cross appeal is accepted and the Commissioner (Appeal)'s order confirming the penalty of Rs. 65,000/- under Rule 173Q is set aside by allowing the cross appeal.

7. Both the appeals are disposed of in the above terms. Ordered accordingly.