Excise Appeal No. 10551 of 2020
(Arising out of OIA-AHM-EXCUS-003-COM-006-20-21 dated- 22/06/2020 passed by
Commissioner of Central Excise, Customs and Service Tax-AHMEDABAD-III)
SHRI RAMESHCHANDRA SHAH
VERSUS
C.C.E. & S.T.-AHMEDABAD-III
WITH
Excise Appeal No. 10552 of 2020
(Arising out of OIA-AHM-EXCUS-003-COM-006-20-21 dated- 22/06/2020 passed by
Commissioner of Central Excise, Customs and Service Tax-AHMEDABAD-III)
MESSRS ASHIK WOOLLEN MILLS LTD ……..Appellant
Gidc Industrial Estate, Gandhinagar, Gujarat
VERSUS
C.C.E. & S.T.-AHMEDABAD-III ……Respondent
Custom House… 2nd Floor,
Opp. Old Gujarat High Court, Navrangpura, Ahmedabad, Gujarat – 380009
Appearance:
Shri Amal Dave, Advocate appeared for the Appellant
Shri Dharmendra Kanjani, Superintendent (AR) for the Respondent
CORAM:
HON’BLE MEMBER (TECHNICAL), MR. RAJU
Final Order No. A / 10041 – 10042 /2023
DATE OF HEARING: 15.09.2022
DATE OF DECISION: 12.01.2023
RAJU
These appeals has been filed by M/s Ashik Woollen Mills Ltd and
Rameshchandra Shah against the demand of central excise duty &
imposition of penalty.
Learned counsel pointed out that the appellants are engaged in
manufacture of various varieties of yarn like Woollen Yarn, Woollen Viscose,
Polyester Viscose Yarn etc. Learned counsel pointed out that on 21.12.1996
the Central Excise Officers visited appellant’s factory and made a Panchnama
seizing various books of accounts records etc. The officer also seized
44497.250 kgs of yarn which were lying in the factory premises on the
ground that it was not entered in RG -1 which was last updated on
19.08.1996. Consequently, the SCN was issued to the appellant proposing to
confiscate the seized yarn and to recover excise duty. Notice also included
a demand of Rs 3,18,290/- of excise duty on shortage of yarn amounting
to 15781.25 Kgs . The SCN also sought to impose penalties on appellant
company and Rameshchandra Shah. The said SCN was confirming demand
of central excise duty of RS . 24,78,032/- and Rs. 3,18,290 on the
appellant company and personal penalties of Rs 5 Lacs each on Ashik R
Shah and Shri R. B Shah. The appellant challenged the order before the
Tribunal and Tribunal decided the issue vide final order No. A/598 -601/
WZB/2005/CI dated 12.05.2005 whereby this Tribunal remanded the matter
for fresh adjudication as the Adjudicating Authority had failed to consider
certain submissions made by the appellant. The matter was re-adjudicated
by the adjudicating authority and demand of RS. 27,96,322/- was
confirmed along with penalties of Rs. 16,95,365/- and Rs. 8,30,957/- on
the appellant company and also imposing a personal penalty of Rs.
10,00,000/- on Shri Rameshchandra Shah. The matter was again challenged
by the appellant before this Tribunal. The Tribunal vide order dated
23.04.2018 held that the appellant was liable to pay Rs. 14,32,222 on the
goods cleared as hank yarn and the appellant was required to pay 5,47,536
on the goods which were cleared without payment of duty . The appellant
was also directed to pay an amount of Rs.2,14,853/- on the goods which
were cleared on the job work without payment of duty. The Tribunal
however dropped the demand of Rs. 2,83,421 on the goods which were
removed on challan to the job worker and the demand of Rs. 3,18,290 on
the shortage of goods was also dropped. Therefore, out of the total
demand of Rs. 27,96,322/- the demand of 06,01,711/- was dropped and
demand of Rs. 21,94,611/- was confirmed. As regard the penalties, the
matter was remanded back to the Adjudicating Authority for re
quantification in view of the Tribunal’s order. The matter was again decided
by the Adjudicating Authority and the Adjudicating Authority has imposed
penalty of Rs 21, 94,611/- under Section 11AC of the Central Excise Act,
1944 read with 173Q of the Central Excise Rules, 1944. The Adjudicating
Authority has imposed penalty of Rs. 2 Lacs on the Managing Director of the
Appellant Company under Rule 209A of the central Excise Rules, 1944. The
present appeals are against the said imposition of penalties.
2.1 Learned Counsel for the appellant argued that the penalties has
been imposed under Section 11 AC of the Central Excise Act, 1944 read
with 173 Q of the Central Excise Rules, 1944. He pointed out that the
penalties under the provisions of Section 11 AC and Rule 173 Q cannot be
imposed jointly. He relied on the decision of Tribunal in the case of Punjab
Recorder Ltd vs. CCE, Chandigarh- 2011 (132) ELT 41 (Tri. Del). Wherein n
the following has been observed:
“17. In regard to payment of interest, we note that charging of
interest came to the statute book w.e.f. 28-9-1996. The demand in the
present case pertains to the period 20-3-1992 to 13-7-1995,
therefore, interest is not payable.
18.In so far as imposition of penalty is concerned, we note that a
penalty of Rs. one lakh has been imposed under Rule 173Q read with
Section 11AC. We note that Section 11AC came to the statute book
only w.e.f. 28-9-1996 whereas in the instant case the demand pertains
to the period 20-3-1992 to 13-7-1995. Hence penalty under Section
11AC on this demand, period is not sustainable in law. Further, we find
that though Rule 173Q has been mentioned but in the absence of
apportionment of penalty under Section 11AC and Rule 173Q, we hold
that imposition of penalty, is not sustainable in law. Ordered
accordingly.”
2.3 He relied on the aforesaid decision to assert that interest under section
11 AB of the Act can only be demanded for the period after the said section
was introduced in the statute book with effect from 28.09.1996. He also
relied on the decision of Tribunal in the case of Agarwal Pharmaceuticals Vs.
CCE Delhi- I – 2002 (146) ELT 190 (Tri.Del)
Learned AR relies on the impugned order.
I have considered the rival submission. I find that the issue regarding
the demand of duty has been decided by the earlier order of the Tribunal
dated 04.2018. On the issue that was decided by the impugned order was
regarding quantification of penalties. Learned counsel has relied on the
decision of Punjab Recorder Ltd (Supra) wherein the following has been
observed:
“17. In regard to payment of interest, we note that charging of
interest came to the statute book w.e.f. 28-9-1996. The demand in the
present case pertains to the period 20-3-1992 to 13-7-1995,
therefore, interest is not payable.
18.In so far as imposition of penalty is concerned, we note that a
penalty of Rs. one lakh has been imposed under Rule 173Q read with
Section 11AC. We note that Section 11AC came to the statute book
only w.e.f. 28-9-1996 whereas in the instant case the demand pertains
to the period 20-3-1992 to 13-7-1995. Hence penalty under Section
11AC on this demand, period is not sustainable in law. Further, we find
that though Rule 173Q has been mentioned but in the absence of
apportionment of penalty under Section 11AC and Rule 173Q, we hold
that imposition of penalty, is not sustainable in law. Ordered
accordingly.”
4.1 It is noticed that when the matter was remanded by the Tribunal, it
was done solely for the purpose of quantification of penalties. The Tribunal in
its order has observed as follows:
“15. The penalties will be decided accordingly by the Adjudicating
Authority in light of above confirmation of the duty. The concerned
jurisdictional officer will decide the issue of penalty de novo in the light
of above confirmation but by providing reasonable opportunity to the
assessee.”
4.2 I find that Hon’ble Apex court in the case of Television &
Components Ltd 2000 (116) ELT 412 (SC) has observed as follows:-
- This brings us to the question of penalty. It is to be remembered
that the Collector had imposed a penalty of Rs. 40 lakhs on the
respondent No.1 as being equivalent to the redemption value of the
TDMs which were not available for confiscation and Rs. 5 lakh each on
the respondent No. 1’s Directors. The penalty was a composite one in
the sense that it was imposed both on account of violation of the
Import Control Order and because of mis-declaration of value and
evasion of customs duty. The majority set aside the penalty on the
respondent No.1 because they negatived the finding under valuation
and evasion and also in view of the order of remand. It is not possible
to apportion the quantum of penalty between the contraventions
found. Therefore, although we have upheld the Collector’s finding on
the issue of mis-declaration and evasion, the question of quantum of
penalty will have to be re-determined by the Collector after
determining the issue on the licensing aspect.
- We make it clear that there was no finding by the Tribunal that
the penalty imposed was unreasonable. On the other hand, the
dissenting Member who had opined against the remand, had held, in
our opinion correctly, that in the circumstances of the case the
quantum of the penalty was justified.
- The appeal is accordingly partly allowed. The decision of the
Tribunal is set aside in so far as it relates to the finding on mis
declaration and evasion. The order of the Collector directing payment
of differential duty is affirmed. On the question of the violation of the
Import Control Order, the adjudicating authority will decide the matter
in the light of the questions earlier framed. Depending on his decision
the quantum of penalty will thereafter be determined by the Collector
in the light of the findings in this judgment. The respondents will pay
the costs of the appeals to the appellant assessed at Rs. 5,000/-.
4.3 It is noticed that facts in the of Punjab Recorders are significantly
different. In the said case the period in dispute was 20.03.1992 to
13.07.1995. Section 11 AC came into statute book with effect from
28.09.1996 i.e. after the disputed period. In this circumstance it was held
that no penalty could have been imposed under section 11 AC. In this back
ground it was held that since joint penalty under section 11 AC and Rule
173 Q has been imposed and penalty under section 11 AC could not have
been imposed therefore, joint imposition of penalties under section 11 AC
read with Rule 173 Q could not be sustain. In the instant case the period
involved is both before the introduction of section 11 AC after introduction
of section 11 AC in the statute book. Therefore, the facts in the present
case are different from the facts in the case relied upon by the appellant.
4.4 In the case of Television & Components Ltd (Supra) also the matter
was remanded to the lower authorities because the joint penalty for 2
offences was imposed and in the final order only one offence was upheld.
Thus the facts in the case of Television & Components Ltd are also different.
In view of the I do not find any error in imposition of composite
penalty under Rule 173 Q read with Section 11 AC as in the instant case
all the charges have been confirmed and the charges pertains to both the
period prior to introduction of Section 11 AC and thereafter. Therefore,
penalty under both the provision could have been rightly imposed. In view of
the above, I do not find any merit in the appeals filed by the Appellant.
The appeals are therefore dismissed.
(Pronounced in the open court on 12.01.2023)
RAJU
MEMBER (TECHNICAL)
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