2004 (96) ECC 575 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(C)

Shri V.K. Agarwal, Member (T) and Shri P.S. Bajaj, Member (J)

CCE, Indore

Versus

Deepak Spinners Ltd.

Appeal No. E/2645/2003-NB(C)

[Arising out of Order-in-Appeal No. 350-CE/IND/Appl-II/2003 dated 30.6.2003 passed by the Commissioner of Central Excise (Appeals-III), Indore]

Final Order No. 389/2004-NB-C, dt. 18.5.2004, Certified on 11.6.2004

Penalty/Interest

The respondents did not pay the duty voluntarily. They deposited the duty when they were caught by the Department on scrutiny of their record of having wrongly availed the benefit of Notification No. 5/98 without complying its condition No. 17 which imposed a mandatory obligation on them to procure requisite certificate from the competent authority before the clearance of the goods. No sufficient cause has been shown by them as to why this condition of the exemption notification was not complied with by them and they cleared the goods without payment of duty. There had been deliberate breach of mandatory condition of the notification by them with intent to cause wrongful gain to themselves and loss of revenue to the Government. It is not a fit case, where penalty and interest should have been quashed by the Commissioner (Appeals). That being so, the impugned order of the Commissioner (Appeals) in this regard cannot be sustained and is set aside. The Order-in-Original regarding imposition of penalty and interest, against the respondents, as passed by the Adjudicating authority is restored.

[Para 3]

Appeal is accepted

PRESENT :

Shri D.N. Choudhary, SDR for the appellant.

None for the respondent.

Cases Cited :

1. Ashok Leyland Ltd. v. CCE, Chennai, 2003 (89) ECC 453 (Distinguished)........... [Para 3]

2. C.P. Chinnasamy v. CCE, Madurai, 2004 (164) ELT 449 (Distinguished)............. [Para 3]

3. EDI Parry (India) Ltd. v. CCE, Jaipur, 2003 (157) ELT 193 (Distinguished).......... [Para 3]

4. Rashtriya Ispat Nigam Ltd. v. CCE, Visakhpatnam, 2003 (161) ELT 285 (Distinguished) [Para 3]

Per : P.S. Bajaj

In this appeal, the Revenue has challenged a part of the impugned Order-in-Appeal vide which the Commissioner (Appeals) has set aside the penalty and interest as imposed by the adjudicating authority on the respondents, while confirming the duty demand.

2. None has come present on behalf of the respondents. They have filed their written submissions. We have heard both sides and gone through the record. The facts made out from the record are : The respondents are manufacturer of man-made yarn. They availed the modvat credit facility under Rule 57-A of the Rules and cleared the yarn to M/s. Punjab State Handloom Weavers Apex Co-operative Society Ltd., Chandigarh, without payment of duty. But they were served with a show cause notice of having violated the condition No. 17 of the Notification No. 5/98 dated 2.6.1998 under which they claimed exemption from payment of duty for having not obtained certificate as required under said condition before clearing the goods. The adjudicating authority confirmed the duty demand in all of Rs. 1,12,392 with equal amount of penalty under Section 11-AC read with Rule 173-Q payable with interest. The learned Commissioner (Appeals) has upheld the duty, but set aside the penalty and the interest on the ground that the duty was deposited by the respondents before the issuance of the show cause notice.

3. Therefore, the issue which falls for our consideration is, as to whether the penalty and interest could be set aside by the Commissioner (Appeals) on the simple ground that the duty was deposited by the respondents before the issuance of the show cause notice or not. The respondents have in the written submissions placed reliance on three judgments of the Tribunal and one of the Apex Court to justify the order of the Commissioner (Appeals) in this regard. The judgments referred to by them are as under:

(i) Ashok Leyland Ltd. v. CCE, Chennai, 2003 (89) ECC 453 : 2003 (156) ELT 995;

(ii) EDI Parry (India) Ltd. v. CCE, Jaipur, 2003 (157) ELT 193;

(iii) C.P. Chinnasamy v. CCE, Madurai, 2004 (164) ELT 449; and

(iv) 2004 (164) ELT part 1, page A-53, vide which the Apex Court has affirmed the view taken by the Tribunal in the case of Rashtriya Ispat Nigam Ltd. v. CCE, Visakhpatnam, 2003 (161) ELT 285 [Final Order No. 1454/2002 dated 13.11.2002]

In all cases, the Tribunal is said to have taken the view that, where penalty has been voluntarily paid by the assessee before the issuance of the show cause notice, no penalty under Section 11-AC is imposable. But, in our view, the ratio of the law laid down in these cases is not attracted to the case of the respondents. The respondents did not pay the duty voluntarily in this case. They deposited the duty when they were caught by the Department on scrutiny of their record of having wrongly availed the benefit of Notification No. 5/98 without complying its condition No. 17 which imposed a mandatory obligation on them to procure requisite certificate from the competent authority before the clearance of the goods. No sufficient cause has been shown by them as to why this condition of the exemption notification was not complied with by them and they cleared the goods without payment of duty. If they were not caught by the Department, they would have enjoyed the benefit of evasion of duty. There had been deliberate breach of mandatory condition of the notification by them with intent to cause wrongful gain to themselves and loss of revenue to the Government. Therefore, keeping in view the conduct of the respondents, it is not a fit case, in our view, where penalty and interest should have been quashed by the Commissioner (Appeals). That being so, the impugned order of the Commissioner (Appeals) in this regard cannot be sustained and is set aside. The Order-in-Original regarding imposition of penalty and interest, against the respondents, as passed by the Adjudicating authority is restored. However, keeping in view the facts and circumstances of the case, the penalty is reduced to Rs. 10,000 (rupees ten thousand only) and interest will also be payable, as per law by the respondents. The appeal of the Revenue accordingly stands accepted in the above terms.

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