The Court dismissed the Central Excise Application challenging the Tribunal's order upholding penalty. The judges held that merely using a wrong classification heading or claiming benefits under a wrong heading did not constitute an offence under Rule 173Q(bbb) or (d).
Application dismissed with no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CENTRAL EXCISE APPLICATION NO.43 OF 2000
The Commissioner of Central
Excise Mumbai - V, 5th Floor,
Utpad Shulk Bhavan,
Plot NO.C-24, Sector - E,
Bandra Kurla Complex,
Bandra (E), Bombay - 51. .. Applicant.
V/s.
Indabrator Limited,
NSE Compound, Western
Express Highway,
Goregaon (E), Bombay 63. .. Respondent.
Mr.R.V. Desai, senior advocate with Mr.A.S. Rao for
the applicant.
Mr.Ajay Panicker for the respondent.
CORAM : V.C. DAGA &
J.P. DEVADHAR, JJ.
DATED : 7TH JUNE, 2006.
P.C. :
Heard learned counsel for the rival parties.
Perused application and documents annexed thereto.
2. This Central Excise Application was admitted by
this Court on 3rd February, 2005 on the following
substantial question of law:
Whether on the facts and in the circumstances of
the case, the Tribunal was right in law in
deleting the penalty imposed on the assessee
under Rule 173Q of the Central Excise Rules,
1944, without appreciating the fact had the
change in classification made by the assessee
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gone unnoticed the Revenue would have suffered a
loss of Rs.15,00,000/- ?
THE FACTS :
3. This Central Excise Application at the instance
of the Revenue arises from the order of the Customs
Excise and Service Tax Appellate Tribunal (‘the
Tribunal’ for short) dated 17th February, 2000; whereby
the order imposing penalty by the authority in original
affirmed by the first appellate authority came to be set
aside holding that an attempt to change in
classification in order to obtain benefit available in
law is not punishable under the Central Excise Act and
Rules.
THE SUBMISSION :
4. Mr.R.V. Desai, learned senior counsel appearing
for the Revenue finding fault with the view taken by the
Tribunal submits that an attempt on the part of the
respondent - assessee to change the heading of
classification with a view to grant benefits in favour
of its customers by itself is in breach of Rule 173Q
(bbb) and (d) of the Central Excise Rules, 1944 (‘the
Rules’ for short)
STATUTORY PROVISION :
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5. In order to appreciate above submissions, it is
necessary to turn to the text of the Rule 173Q which
reads as under :
"173Q. Confiscation and penalty. - (1) Subject
to the provisions contained in section 11AC of
the Act and sub-rule (4) of rule 57-I and
sub-rule (5) of rule 57U, if any manufacturer,
producer, registered person of a warehouse or a
registered dealer -
(a) --------
(b) --------
(bb)---------
(bbb) enters wilfully any wrong or incorrect
particulars in the invoice issued for the
excisable goods dealt by him with intent to
facilitate the buyer to avail of credit of the
duty of excise in respect of such goods which is
not permissible under these rules ; or
(c) ----------
(d) contravenes any of the provisions of
these rules with intent to evade payment of
duty,
then all such goods shall be liable to
confiscation and the manufacturer, producer,
registered person of a warehouse or a registered
dealer, as the case may be, shall be liable to a
penalty not exceeding three times the value of
the excisable goods in respect of which any
contravention of the nature referred to in
clause (a) or clause (b) or clause (bb) or
clause (bbb) or clause (c) or clause (d) has
been committed, or five thousand rupees,
whichever is greater.
CONSIDERATION :
6. So far as Rule 173Q(bbb) is concerned it
contemplates incorporation of wrong or incorrect
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particulars wilfully in the invoice issued for the
excisable goods dealt with by the manufacturer with
intent to facilitate the buyer to avail of credit of the
duty of excise in respect of such goods which is not
permissible under the Central Excise Rules, 1944.
7. There is no material on record even remotely to
suggest that at any point of time the respondent -
assessee has issued any invoice of the goods dealt with
by it in favour of any of its customers muchless entered
wilfully any wrong or incorrect particulars in the
invoice issued for the excisable goods to its customers
with intent to facilitate the buyer to avail any benefit
of excise duty in respect of the goods which is not
permissible under the Central Excise Rules. In our
view, mere filing of the classification list and
mentioning wrong heading of classification or claiming
benefit under wrong heading cannot be said to be within
the sweep of the Rule 173Q(bbb). Hence, the submission
made by Mr.Desai in this behalf has no merit. The same
is unsustainable.
8. So far as second submission based on sub-rule
(d) of Rule 173Q is concerned, sub-rule contemplates
contravention of any of the provisions of the Rules with
intent to evade payment of excise duty. It is no doubt
true that the tribunal has recorded findings that the
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intention behind giving a wrong heading in the
classification was with intent to evade payment of duty.
It was, therefore, necessary for Mr.Desai to point out
any rule saying wrong reference to the heading of
classification amounts to breach of the provisions of
the Act or Rules. Mr.Desai could not put his finger on
any of the rules so as to bring the act of the
respondent - assessee within the sweep of that rule so
as to hold breach of sub-rule (d) of Rule 173Q(d). In
this view of the matter, the second submission advanced
by Mr.Desai is also misplaced and without any merit.
CONCLUSION :
9. In the aforesaid view of the findings recorded
by us, we do not see any fault with the view taken by
the Tribunal while setting aside the penalty imposed by
the authorities below.
10. In the result, application is dismissed with no
order as to costs.
(V.C. DAGA, J.)
(J.P. DEVADHAR, J.)
1 issue framed by the court
Whether mere description of goods under a wrong heading in the classification list or claiming benefit under wrong heading amounts to a breach of Rule 173Q(bbb) or (d).
1 provisions across 1 enactments
The Commissioner of Central Excise Mumbai
Indabrator Limited
V.C. DAGA
J.P. DEVADHAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court