Delhi High Court
Commissioner Of Central Excise, ... vs Radhika Containers Pvt. Ltd. on 1 September, 2011
Author: Sanjay Kishan Kaul
* THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 01.09.2011
+ CEAC No. 20/2006
COMMISSIONER OF CENTRAL EXCISE, DELHI-I ...... APPELLANT
Vs
RADHIKA CONTAINERS PVT. LTD. ..... RESPONDENT
Advocates who appeared in this case:
For the Appellant: Mr Mukesh Anand & Mr Shailesh Tiwari, Advocates
For the Respondent: None
CORAM :-
HON'BLE MR JUSTICE SANJAY KISHAN KAUL
HON'BLE MR JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers may
be allowed to see the judgment ?
2. To be referred to Reporters or not ?
3. Whether the judgment should be reported
in the Digest ?
SANJAY KISHAN KAUL, J (ORAL)
1. At the outset we may note that the respondent in this case
has been served through publication, as reflected in the order dated
01.04.2011. Thereafter, the matter was posted for hearing on
18.07.2011. Since the Division Bench did not assemble on the said
date, the matter was posted for today, i.e., 01.09.2011. There is no
appearance on behalf of the respondent even today, despite the
matter being passed over once. In these circumstances, the
respondent is proceeded ex-parte.
CEAC 20-2006 Page 1 of 6
2. Mr Anand, learned counsel for the revenue, submits that the
appeal can be heard on the basis of the material available on
record. He further submits that the appeal be admitted and decided
as it has been pending for a considerable period of time on a short
issue, which is covered by the judgment of the Supreme Court.
3. In view of the above circumstances, the appeal is admitted.
The only question of law which is propounded for our consideration
by the revenue is as follows:
(i) Whether the Customs Excise & Service Tax Appellate
Tribunal (in short „CESTAT‟) erred in law in reducing
the penalty imposed to an amount which is less than the
duty amount re-quantified by it, ignoring the provisions
of Section 11AC of the Central Excise Act, 1944‟.
4. The brief facts of the case in so far as they are necessary to
decide the issue at hand are as follows: The Anti-Evasion Branch of
the revenue while conducting a cordon and search exercise i.e.
'nakabandi‟ at Udyog Nagar, Main Rohtak Road, Nangloi intercepted
a vehicle which was loaded with empty drums of fibre board. On the
driver being questioned, the goods were traced to the premises of
the respondent. Importantly the driver did not carry with him
documents to cover the goods except a delivery challan bearing no.
38 dated 15.09.1999. The officers of the Anti-Evasion Branch
recorded the statement of the driver, and thereafter, conducted a
raid at the premises of the respondent. In the raid it was found that
CEAC 20-2006 Page 2 of 6
finished goods, as well as the raw-material, were short in
comparison to the last recorded balances in RG-1 register. It is in
these circumstances that on 08.03.2000 a show cause notice was
issued to the respondent.
4.1. After receipt of the reply, the matter was taken up for
adjudication by the Additional Commissioner Central Excise (in short
'Addl. Commissioner'). By an order dated 11.01.2001 the Addl.
Commissioner confirmed the demand and proceeded to impose,
inter alia, penalty on the respondent in the sum of ` 6,13,028/- in
addition to penalty imposed on the directors personally.
4.2. Being aggrieved the respondent as well as the directors
preferred the appeals with the Commissioner of Central Excise
(Appeals) (in short the 'Commissioner'). By an order dated
11.11.2003 the Commissioner upheld the order-in-original, i.e., the
adjudication order. However, the penalty imposed on the
respondent was reduced to ` 2 lacs.
4.3. The matter was carried in appeal by the respondent to
CESTAT. The CESTAT by the impugned judgment dated 01.09.2006
sustained the view taken by the authorities below with a slight
modification in so far as quantification of the duty was concerned.
The CESTAT gave benefit to the respondent to the extent that, the
value of clearances of goods, on which duty had been demanded,
was treated as cum - duty price. Based on adoption of this
CEAC 20-2006 Page 3 of 6
principle, the duty was re-calculated, and thus, crystallized at `
5,64,907/-. In respect of duty imposed on the respondent, the
CESTAT reduced it to ` 2 lacs. It is this part of the order, whereby
penalty imposed has been reduced to ` 2 lacs, that the revenue has
come up in appeal.
5. Mr Anand on behalf of the revenue has relied upon the
judgment of the Supreme Court in UOI vs Dharmendra Textile
Processors 2008 (231) E.L.T. 3(SC) and Sony India Ltd. vs
Commissioner of Central Excise, Delhi 2004(167) E.L.T. 385
(SC). In addition reliance was placed on the judgment of the
Division Bench of Bombay High Court in the case of C.C.E & C.,
Aurangabad vs Godavari Manar Sahakari Sakhar Karkhana
Ltd. 2008 (228) E.L.T. 172 (Bom) as also our order passed in
Commissioner of Central Excise vs M/s Poonam Sparks Pvt.
Ltd. in CEAC No. 9/2004 dated 12.07.2011.
6. We have heard the learned counsel for the revenue. In our
view the matter is no longer res integra. The view taken by the
Supreme Court in the aforementioned judgment (i.e., Sony India
Ltd.) has also been considered, and has found resonance in the
Division Bench judgment of the Bombay High Court in Godavari
Manar Sahakari (supra). In that case the Bombay High Court
specifically considered a contrary view taken by the Division Bench
in so far as the quantification was concerned in the case of UOI vs
CEAC 20-2006 Page 4 of 6
Kirloskar Oil Engines Ltd. 2006 (206) E.L.T. 85 (Bom). The
relevant observations made in paragraphs 9 & 10 of the Judgment in
the case of Godavari Manar Sahakari (supra) are extracted
hereinbelow:
"9. The reasons for such a stiff and stringent provision,
are not far to guess. As can be seen from the scheme of
Sections 11A, 11AA, 11AB and 11AC of the Act. It is
evident that Section 11A prescribes procedure for
recovery of duties not levied or not paid, or short-levied or
short-paid, or erroneously refunded. Sub-Section (1)
within itself and within its proviso covers the cases of duty
not paid/ short paid in absence of mens rea or with
intention. Section 11A(2) prescribes interest on delayed
payment of the duty, in cases where, in spite of
determination under Section 11A(2), the duty so
determined is not paid within three months. Interest on
delayed payment of duty, as can be charged under
Section 11AB, is chargeable in both the cases, i.e., evasion
of duty without, mens rea and wild intention to evade. It
can be said that interest chargeable under Section 11AB,
is a sort of civil liability imposed upon assessee for
retaining the amount to which revenue was entitled, with
him and utilizing the same, instead of allowing the same to
come into the State coffer. Section 11AC is applicable
only to those cases, where there is evasion of duty
intentionally, by fraud, collusion or willful misstatement or
suppression of facts. It may not be erroneous to say that
penalty under Section 11AC is a sort of penal provision
and, therefore, the said provision is harsh and stringent.
The person, who deliberately evades the duty, is required
CEAC 20-2006 Page 5 of 6
to pay penalty equivalent to the amount of duty
determined as evaded by fraud, collusion etc.
10. We, therefore, accept the submission of learned
Assistant Solicitor General that under Section 11AC, there
is no discretion left with the authority to impose any
different quantum of penalty."
7. We are in respectful agreement with the view taken. We had
taken a similar view in Poonam Sparks (supra) case based on the
view of the Supreme Court in Dharmendra Textile (supra).
8. In view of the above, the question is answered in the
affirmative and in favour of the revenue. The appeal is allowed.
The order of the CESTAT is set aside to the extent it reduced the
penalty to less than the amount quantified as the duty evaded by
the assessee. With the aforesaid directions the appeal is disposed
of.
SANJAY KISHAN KAUL, J.
SEPTEMBER 01, 2011 RAJIV SHAKDHER, J.
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