High Court
Case Details
^^i^^ I. ^^'jl^^^^^^^^^^.^i^IS^^rv-^-^^^ s':y- ^ .•':.. ./.-' •a^' f-v. K ^ IK ..^^¥^' Sw^.^ ^ . THEHIGHGOURTOF cr^ °, '^ lKI*^""JUDICATURE ATBILASPURfCHHATnSGARHl TAXCASENO. \^- OF 2009 't,; .^1 APPELLANT' UNIONOFINDIA ^ THROUGH COMMISSIONER, :^ ii-s^ f^:e&vv li F 2<w /^ l'1'"-^'^^ E CH^^ CENTRAL EXCISEAND CUSTOMS, CENTRAL EXCISE BHAWAN, DHAMTARI-ROAD.TIKARAPARA, RAIPUR (C.G.) 492-001 Versus ^RlESPONDENT^M/S BEEKAYENGG. &GASTINGSLTD, 27/28, INDUSTRIALESTATE,BHILAI DISTT. - DURG(C.G.) ^••s :^,,' i'wiacy* 'i.w.'K/.sr^»!A >_ 1 S^in-p-c-7/7 ^ .^i^ |jB/fflU907 APPEALUNDERSECTIONJ5-G OF THE CENTRAL EXCISE ACT. 1944: ~\ \. ^1 ^ (^
Legal Reasoning
HIGH COURT OF CHHATTISGARH AT BILASPUR DIVISION BENCH CORAM:
Legal Reasoning
HON'BLE SHRI YATINDRA SINGH, C.J. HON'BLE SHRI PRITINKER DIWAKER, J Appellant' Tax Case No. 12 of 2009 : Union of India VERSUS Respondent : M/s Beekay Engg. & Castings Ltd. Appeal under Section 35-G of the Central Excise Act. 1944 Appearance: Shri Gary Mukhopadhyay, counsel for the Appellant. Shri Vinay Kumar Jain, counsel for the Respondent. JUDGEMENT (17thApril, 2013) 1. This is an appeal against the order dated 30.09.2008 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (the Tribunal) dismissing the appeal of the Central Excise Department (the Department) and upholding the order of the Commissioner (Appeals) reducing the quantum of penalty. THE FACTS 2. M/s Beekay Engineering and Casting Limited, Bhilai, district Durg, Chhattisgarh (the Assessee) manufactures of cast iron and steel. process, it purchases scrap iron from different units and pays excise duty, taking cenvat credit on its production. In this 3. The Department conducted an audit of the accounts of the Assessee for the period of January, 1999 to September, 2002. found that the Assessee had purchased scrap iron frbm M/s Bansal Brothers and had taken cenvat credit 6f duty amounting to ^20,348/-. In this audit, it was *. 4. M/s Bansal Brothers had in turn purchased the scrap iron from one M/s Hira Steels Limited, which was exempt from payment of excise duty under notification No.49 of 1997 under section 3A of the Central Excise Act, 1944 (the Act). According to the Department, in view of the fact that the M/s Hira Steels was exempted from payment of excise duty, Assessee was not entitled to daim cenvat credit. . ..—„.^rfSS ,.»te S'S •» 5. The Department issued a show-cause notice dated 03.05.2005 requiring the Assessee to show cause as to why the cenvat credit of ^20,348/- availed against input credit be not disallowed and interest as well as the penalty be imposed upon it under section 11AC of the Act and rule 173Q ofthe Central Excise Rules, 1944 (the Rules). 6. The Assessee filed its reply. The Assistant Commissioner, Central Excise Division-11, Bhilai (the Assistant Commissioner) by an order dated 30.11.2005 disallowed the cenvat credit duty of ^20,348/-. He also imposed penalty ofthe same amount and ^5,000/- under section 11AC of the Act and rule 1 73Q of the Rules respectively. 7. Against the aforesaid order, the Assessee filed an appeal. In the appeal dis-allowance of cenvat credit of ^20,348/- was upheld. However, considering the circumstances ofthe case, penalties undersection 11AC of the Act and under rule 173Q of the Rules were reduced to ^5,0001- and to ^2,000/-, respectively. 8. Against the aforesaid order, the Department flled an appeal. It was dismissed. Hence, the present appeal. THE DECISION 9. We have heard counsel for the parties. This appeal was admitted on 24.04.2009 on the following substantial question of law: 'Whether any discretion can be exercised on the quantum of penalty imposed under section 11AC ofthe Central Excise Act, 1944?' ,y.^ 10. The Department also filed an'application (IA No.1) dated 20.03.2012 framing the following additional substantial question of law: .'Whether the learned CESTAT erred in reducing the mandatory penalty under Sec. 11AC ofthe Central Excise Act, 1944, as it did not give any cogent reason or finding for exercising the discretion reducing the penalty under Sec.11AC and Rule 173A, Central Excise Rules, 1944?' 5S ^•^. <fswy%. lSs?^>.- '«.3B|s |y/ s .«§ & 1 Yfc ^-^^'"s^^* However, as this Additional question is substantially the same as the question on which this appeal was admitted except for its wording, we refrain from framing this additional question in the appeal and proceed to decide the appeal. 11. The.counsel for the Department places reliance on Union of India Vs Rajasthan Spinning and Weaving Mills {(2009) 13 SCC-448} and Union oflndia Vs Dharamendra Textile Processors and others {(2008) 13 SCC- 369} and submits that: • The duty under section 11AC is mandatory and is equal to the duty; • It cannot be reduced as has been done in this case. 12. Section 11AC of the Act is titled 'PenaIty for short-levy or non-levy of duty in certain cases'. It provides that in case there is a short-levy or non-levy or duty has been refunded due to the conditions mentioned in that section, then the Assessee would also be liable to pay penalty equal to the duty so determined. 13. Section 11AC of the Act uses the word 'shall also be liable to pay a penalty equal to the duty so determined'. This shows that if the condition mentioned in that section are satisfied then penalty has to be equal to the duty so determined and this is mandatory. There isno discretion on the part of the assessing authority to reduce the penalty. 14. The counsel for the Assessee does not dispute the aforesaid statement of law but submits that: • The penalty can be imposed only if the conditions mentioned in section 11AC ofthe Act are satisfied; • The conditions mentioned.under section 11-AC of the Act are that there has to be fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act; • In the present case, the Assessee had claimed cenvat credit on the basis of the invoices raised by M/s Bansal Brothers in which the excise duty was claimed and the fact that M/s Bansal Brothers N. ^ ^- <??!*s!s?is&. /''^acssf'%, 1 t -:^ ^ '^L. ''VSs-. ?!.;i'da^,..^-.t'"-^ ^' —^,...•':?-''.'" ^ had purchased scrap from M/s Hira Steels Limited which was not liable to pay excise duty as jt was exempt from payment of excise duty under notification No.49 of 1997, was neither in the knowledge of the Assessee nor could be in its knowledge. The cenvat credit was bona fide claimed by the Assessee; ^.^ • It cannot be said that there was any fraud or misstatement or suppression of fact on the part of the Assessee; • The Assessee had raised the aforesaid points before the Commissioner (Appeals) but he without recording any finding on the points has made section 11AC applicable; • The Assessee did not file any appeal as amount involved was meagre. 15. The counsel for the Department submits that the Commissioner (Appeals) has held that section 11AC of the Act was applicable and as the Assessee has not filed any appeal against the same, it cannot be permitted to raise this question. 16. The submissions of the parties are weighty. It appears that: • The Assessee had purchased scrap from M/s Bansal Brothers and it had claimed cenvat credit on the invoices raised by M/s Bansal Brothers, in which the excise duty was claimed; • The fact that M/s Bansal Brothers could not pass the duty asit had purchased the scrap from M/s Hira Steels, whichwas exempted from payment of excise duty under notification No.49 of 1997 was neither in the knowledge of the Assessee nor could it be in its knowledge; • The Assessee had paid the excise duty to M/s Bansal Brothers. It cannot be said that there was any fraud on the part of the Assessee; • The fraud, if any, may be someone else. However, there is no such finding by the Commissioner (Appeals) or by the Tribunal on the aforesaid points. 17. The counsel for the Department prays that considering the fact that there.is no finding on the aforesaid points, the case may be remanded to /'y%%. '< s*». ^ ^{^^r1", y'-^^' y ~''^-:: ^- * ss,^' .i :.., ./ the Tribunal or Commissioner (Appeals) to consider the aforesaid points. But, in view of the reasons mentioned in the succeeding paragraphs, we see no justification to finally decide the submissions of the parties or to remand the case. 18. The section 11AC of the Act mandates that if the conditions under that section are satisfied then penalty equal to duty has to be imposed but its first proviso provides that in case the entire duty as determined under section 11A(2) along with interest under section 11AB is paid within 30 days from the date of communication then amount of penalty payable under section 11AC is one fourth ofthe duty so determined. 19. The Assessee, in his reply filed before this Court, has stated that the duty along with interest was paid within 30 days from date of communication of the order determining the duty. There is no denial of the same. The Department has not filed any rejoinder. If this is so then under the first proviso to section 11AC ofthe Act, only 1/4lh ofthe penalty could be imposed. 20. In the present case, the Commissioner (Appeals) has reduced It is about 1/4lh of the duty so determined. The penalty to ^5,000/-. Tribunal has upheld it. The Commissioner (Appeals) or the Tribunal has not recorded any specific reason for reducing it except for the general statement. However, ifthe above facts ares not disputed, then only 1/4th could be imposed and that is imposed. 21. Considering the following circumstances that— • The amount involved in the case itself is very small amount ie about ^15,000/-; • The main question framed by the Department has been decided in its favour; • The Ministry of Finance itself has issued instructions dated 20.10.2010 stating therein that if the amount of tax and penalty is less than 3f2,00,000/-, then appeal may not be filed in the High Court and this limit was further increased to ^10,00,000/- by the instructions dated 17.08.2011—-^ SW^SStf^5^^^. b~~s^'? .'"' ^lj^^•Ss&ss^" .^ '^^"•'fsSW^ We see no justification to remand the case or to interfere with the order passed by the Commissioner (Appeals) or the Tribunal. The tax case is dismissed. - _ ---——-- Sd/- Chief Justice Sdlr Pritinker Diwaker Judge nlmmi