M/S Hoya Lens India Pvt. Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Original No. Belapur/112/Bel-I/R-IV/COMMR/ KA/2013-14 dated 18.11.2013 passed by the Commissioner of Central Excise, Belapur).

For approval and signature:

Honble Shri Anil Choudhary, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? ======================================================

M/s Hoya Lens India Pvt. Ltd. Appellant

Vs.

Commissioner of Central Excise, Belapur Respondent

Appearance: Ms. Padmavati Patil, Advocate for Appellant

Shri N.N. Prabhudesai, Supdt. (AR) for Respondent

CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing: 07.04.2015

Date of Decision: .04.2015

ORDER NO.

Per: Shri Anil Choudhary

The appellant, M/s Hoya Lens India Pvt. Ltd., is in appeal against Order-in-Original No. Belapur/112/Bel-I/R-IV/COMMR/KA/2013-14 dated 18.11.2013 passed by the Commissioner of Central Excise, Belapur.

2. The brief facts of the case are that the appellant is engaged in the manufacture of excisable goods having Central Excise registration. During the scrutiny of ER-1 Returns, it was observed that the appellant had not filed ER-1 returns for the month of April, 2012 and May, 2012 on due dates and that they had failed to make the payment of duty on the due dates. The details of which are as follows: -

Sl. No. Month Duty payable (PLA) Date of payment No. of days in delay 1

April, 12 Rs.3,10,367/- (PLA) Rs.7,381/- (Interest) 21.06.2012 28.09.2012

269

Rs.21,91,779/-

Rs.2,92,918/- (interest) 29.01.2013 04.02.2013

2

May, 12 Rs.1,27,369/- (PLA) Rs.2,667/- (Interest) 17.07.2012 28.09.2012

238

Rs.4,10,019/-/-

Rs.48,528/- (interest) 29.01.2013 04.02.2013

Accordingly, the Revenue felt that the appellant had defaulted in payment of excise duty as prescribed and had as per Revenue, paid beyond 30 days from the due date, they are required to pay duty for each consignment at the time of removal of goods from the factory without utilizing the CENVAT Credit till the date of payment of outstanding duty amount along with interest, in terms of Rule 8(3A) of the Central Excise Rules, 2002. Accordingly, vide show-cause notice dated 4.6.2013, the appellant was required to show cause as to why the goods valued at Rs.8,39,16,190/- removed in violation of sub-rule 3A of Rule 8 of Central Excise Rules, 2002, though not available for seizure, should not be held as liable for confiscation under the provisions of Rule 5 of the Central Excise Rules, 2002 and as to why not penalty be imposed under Rule 25/27 of the Central Excise Rules, 2002. The appellant contested the show-cause notice by filing reply stating therein that for the month of April, 2012, out of total duty liability is Rs.25,02,146/- they have paid Rs.21,91,779/- by debiting through CENVAT Credit.

Balance Rs.3,10,367/- payable by 5th May was paid on 21.6.2012 and the interest was paid on 28.9.2012. Similarly for the month of May, 12 out of total duty liability of Rs.5,37,338/- they have paid Rs.4,10,019/- through CENVAT Credit and balance amount of Rs.1,27,369/- payable by 5.6.2012 was paid on 17.7.2012 and the interest was paid on 28.9.2012. Thus, for both the month, a part of the duty was paid by a delay of one month, due to financial problems and due the absence of the Excise dealing person. The appellant further contended that they informed the jurisdiction Superintendent the fact of their payment of defaulted duty amount from PLA along with interest vide letter dated 14.11.2013. The show-cause notice was adjudicated by the Commissioner recording the find that it is not a case of deliberate default with intent to evade payment of duty or use of govt. resources to run their business. The assessee has submitted and stated that the delay in payment of part of the duty and interest thereon occurred due to financial problem and also due to absence of Central Excise dealing person.

Considering the facts of the case that the assessee have already paid the duty through PLA along with interest, the adjudicating authority taken a lenient view and imposed penalty of Rs.5 lakhs for violation of Rule 8 read with Rule 25 of the Central Excise Rules.

2.1 Being aggrieved, the appellant-assessee is in appeal before this Tribunal.

3. The learned Counsel for the appellant states that the impugned order is bad as the same has been passed without considering and appreciating the submissions made, provisions of law and the existing ruling by the Tribunal and High Courts. It is further stated that the appellant have suo motu paid interest on the amount of duty paid through PLA and also on the amount of duty paid by debit of the CENVAT Credit account. Further, the appellant had paid duty and the interest suo motu and had also filed the returns although after a delay of few days from the due date.

3.1 It is further urged that from a plain reading of Rule 25, it is evident that section starts with subject to the provisions of Section 11AC of the Act i.e. the penalty is imposable if the goods are removed in contravention of Central Excise Rules, inter alia, wherein the assessee does not account for any excisable goods manufactured or stored excisable goods without having taken registration certificate, contravened any of the provisions of the Rule with intent to evade payment of duty. In the facts of the case, there having been admittedly no such findings, the Commissioner have erred in imposing the penalty under Section 11AC read with Rule 25 and as such the same is fit to be set aside.

3.2 The learned Counsel relies on the ruling of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise Vs. Saurashtra Cement Ltd.  2010 (216) ELT 71, wherein the question framed for decision was whether, in the facts and circumstances of the case, the Tribunal is right in holding that the respondent assessee will attract penalty under penal provisions of Rule 27 of Central Excise Rules, 2002 and not under Rule 25 of the Central Excise Rules, 2002 and, that, the invocation of Rule 25 of the Central Excise Rules for imposition of penalty for delayed deposit of duty, is not in accordance with law? The Hon'ble High Court has recorded the finding that Rule 25 starts with the word subject to the provisions of Section 11AC .. Section 11AC of the Central Excise Act deals with penalty for short levy or non levy of duty in certain cases. It says that where the duty of excise have not been levied or paid or have been short levied or short paid or erroneously refunded by reasons of fraud, collusion of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay a penalty equal to the duty so determined.

For the purpose of invoking section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short levied or short paid or the refund is erroneously granted by reasons of fraud, collusion or any willful mis-statement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. On such observation and finding the Honble Gujarat High Court confirmed the order of the Tribunal and dismissed the appeal filed by the Revenue by holding that there was no intention on part of the respondent assessee to evade any payment of duty and it was only because of stringent financial condition that the duty could not be paid in time and the same was paid as soon as liquidity was available with interest. Thus, it was held that the Tribunal was justified in setting aside the penalty under Rule 25 and restricting the penalty of Rs.5000/- under Rule 27 of the Rules.

3.3 The learned Counsel also relies on the ruling of the Hon'ble Gujarat High Court in the case Commissioner of Central Excise Vs. Harish Silk Industries  2013 (288) ELT 74 (Guj.), wherein also in the case of default in fortnightly payment, CENVAT Credit is not permissible to utilized and the assessee was ordered to pay the duty for each consignment by debiting in account current and the assessee was required to make payment of duty consignment wise from the PLA only and not to have utilized the payment of CENVAT Credit till the payment of duty including interest thereon. Considering the question on imposition of penalty under Rule 25 read with Section 11AC of the Act, it was held that the requirement of Section 11AC have to be satisfied while imposing penalty under Rule 25. If there is no fraud, collusion or any willful mis-statement or suppression of facts or contravention of the provisions of Act and Rules with intention to evade payment of duty, penalty under Rule 25 cannot be imposed. It was further held that the assessee is liable only for penalty under Rule 27 of the Rules. Accordingly, the appellant prays for setting aside the penalty under Rule 25 of the Rules.

4. The learned AR relies on the impugned order and further relies on the Single Member Bench ruling of this Tribunal being final order No. A/460/15/SMB dated 10.2.2015 passed in Appeal No. E/86586/13 in the case of M/s Shivam Pressings, wherein the facts that the assessee had defaulted in monthly payment of duty for the month of October, 10 and the default was not made good within 30 days of the due date, in such circumstances, the appellant was required to pay excise duty for each consignment at the time of removal without availing the CENVAT Credit. But the assessee continued to clear the goods without complying with the provisions of Rule 8(3A) and there have been similar default in the month of November and September, 10. It was held that Rule 8(3A) was introduced w.e.f. 1.3.2006 and the earlier Rule did not have any provision for clearing of the goods consignment-wise. The position is changed w.e.f. 1.6.2006 where the goods have been cleared without payment of duty consignment-wise. It is a settled law that under the Act and statutes, various penalty provisions are in the nature of civil obligation and did not require any mens rea or willful intention until and unless the relevant provision provides for the same and accordingly, penalty imposed of Rs.3 lakhs, in view of the number of days of default was reduced to Rs.50,000/-. It was further held that so far demand of duty is concerned, since the same is later on paid, the demand of duty does not survive. Accordingly, the learned AR prays for upholding the impugned order and dismissal of appeal.

5. Having considered the rival contentions, I agree with the view as expressed in the ruling of the Hon'ble Gujarat High Court in the case of Saurashtra Cement Ltd. (supra) and Harish Silk Industries (supra), wherein it was held that penalty under Rule 25 can be imposed only on satisfaction of pre-condition, the condition laid down for the penalty under Section 11AC of the Act. As the return (TR-6) was filed, is recorded in the impugned order, the ingredients of Section 11AC are absent. Accordingly, I set aside the penalty imposed under Rule 25 of Central Excise Rules. However, the assessee will be liable to penalty under Rule 27 of the Act for an amount of Rs.5000/-. Further, I hold that the SMB ruling in the case of Shivam Pressings (supra) as per incurium as the same has been passed ignoring the condition precedent contained in the Rule 25 itself. Thus, the appeal is allowed with consequential relief, if any, in accordance with law.

(Pronounced in Court on .)

(Anil Choudhary) Member (Judicial)

Sinha

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