At, High Court of Punjab and Haryana
By, THE HONOURABLE MR. JUSTICE ASHUTOSH MOHUNTA & THE HONOURABLE MR. JUSTICE MEHINDER SINGH SULLAR
For the Appearing Parties: H.P.S.Ghuman, Jagmohan Bansal, Advocates.
ASHUTOSH MOHUNTA, J.
( 1. ) The Revenue has filed this appeal challenging the order dated 28.10.2008, passed by the Customs, Excise and Service Tax Appellate Tribunal. It is claimed that following substantial question of law would emerge from the said order of Tribunal:-
"Whether CESTAT is correct in allowing the benefit of penalty upto 25% of the duty amount in the case when the penalty so determined was not paid by the party within the period of thirty days which is the pre requirement to avail such benefit as per the second proviso to Section 11 AC?"
( 2. ) This is an Appeal by the Revenue filed under Section 35 G of the Central Excise Act, 1944 (for brevity 'the Act') challenging Order dated 28.10.2008, passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for brevity 'the Tribunal'). Brief facts of the case which are necessary for the disposal of the controversy raised may first be noticed:
( 3. ) The Respondent-Manufacturer i.e. M/s Shipley Hosiery Industries is engaged in the manufacture of Sweaters falling under Chapter Heading 61 of the Central Excise Tariff Act, 1985. The Respondent was registered with the Appellant Department and was availing facility of Cenvat Credit under Central Excise Rules, 1944. On 06.11.2003 Head Quarters (Prev.) staff of the Appellant visited factory premises of the Respondent and physically verified raw material, work in progress and finished goods lying in the factory. A shortage of 7922.723 Kg. finished goods valued Rs.1,98,068/- involving Central Excise Duty amounting to Rs.1,98,068/- was found. The Respondent vide Entry No.30 dated 06.11.2003 debited a sum of Rs.1,66,885/- from the Cenvat Credit account and a sum of Rs.31,183/- vide TR-6 Challan No.1 dated 10.11.2003. The Appellant Department thereafter issued a Show Cause Notice calling upon the Respondent to show cause as to why duty amounting to Rs.1,98,068/- should not be demanded and appropriated against the already deposited by them. Penalty was also proposed under Rule 25 of the Rules read with Section 11 AC of the Act. The Adjudicating Authority vide its Order dated 11.10.2005 confirmed the demand and appropriated the same against the already debited amount. The Adjudicating Authority also imposed penalty of Rs.1,98,068/-. In the Order no specific Rule or Section was invoked but in the discussion and findings, it was held that the Respondent is liable to penalty under rule 25 of the Rule and Section 11 AC of the Act. The aforesaid order was challenged before the Commissioner (Appeals), Central Excise, Jalandhar. The Commissioner (Appeals) vide its Order dated 09.11.2006 dismissed the Appeal of the Respondent-Assessee and upheld the Order of Adjudicating Authority. The Respondent-Assessee filed Appeal before the Tribunal assailing the Order of Commissioner (Appeals). The learned Tribunal vide its Final Order dated 28.10.2008 reduced the amount of penalty from 100% to 25% relying upon the decision of the Delhi High Court in the case of CCE VS. Malbro Appliances (P) Ltd., 2007 (208) ELT 503 (Delhi). The present Appeal is filed against the said decision of the Tribunal. Mr. HPS Ghuman, Ld. Counsel for the Revenue has vehemently argued that the provision of Section 11AC of the Act has now been interpreted by Hon'ble Supreme Court in the case of Union of India VS. Dharmendra Textile Processors, 2008 (231) ELT 3 (S.C.). According to learned counsel a plain reading of 2nd proviso of Section 11 AC of the Act makes it clear that equal amount of penalty is leviable as the Respondent has not deposited penalty within 30 days from the date of adjudication order even though amount of duty was deposited prior to Show Cause Notice. Mr. Jagmohan Bansal, learned counsel for the Respondent- Assessee has, however, submitted that the Tribunal has taken the correct view and the judgement of Hon'ble the Supreme Court in Dharmendra Textile's case (supra) would not be applicable to the facts of the present case. Learned counsel has drawn our attention to proviso to sub section 2 of section 11 AC of the Act and argued that where duty is determined and the interest payable thereon under Section 11 AB of the Act is paid within 30 days from the date of communication of the order of the officer determining such duty then the amount of penalty has to be 25% of the duty so determined. He has further submitted that dealer- respondent has been deprived of the opportunity to pay 25% of the duty because no benefit of the proviso was extended to the dealer respondent by imposing penalty equivalent to 25% of the duty amount. He has highlighted that once the dealer- respondent has deposited the amount of duty as well as the interest much prior to the date of assessment order drawn under section 11(2) of the Act then there 'was no question of delay in depositing the amount of penalty equivalent to 25% of the total duty. He has maintained that the adjudicating authority as well as the first appellate authority had illegally insisted on imposition of penalty equivalent to the amount of duty which has been patently contrary to 1st proviso to Section 11 AC of the Act. The Ld. Counsel supported his argument with the judgement of this Hon'ble Court in the case of CCE vs. J.R. Fabrics (P) Ltd., CEA No.05/2009 The questions of law raised by the appellant are identical as raised in CEA No.05/2009, J.R. Fabrics (P) Ltd. (supra). A Division Bench of this Co
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urt in CEA No.05/2009 vide its Order dated 03.04.2009 agreeing with the view taken by Delhi High Court in Malbro Appliances (P) Ltd. (supra) and KP Pouches (P) Ltd. vs. UOI, 2008 (228) ELT 31, has upheld the Order of the Tribunal and dismissed the Appeal of the Revenue. The counsel of the appellant has failed to show any contrary view of this Court or the Hon'ble Supreme Court. In view of the above, we hold that the present case is squarely covered by the decisions in M/s J.R. Fabrics (P) Ltd. (supra) and M/s Malbro Appliances (P) Ltd. (supra). The appeal filed by the Revenue is accordingly dismissed.