Partly allowed

the commissioner of central excise-pune-ii v. m/s s.g. phyto pharma Pvt. Ltd.

Bombay HC17 Feb 2014CEXA/181/2008

Case brief

AI extract

What is this about?

The High Court allowed the Revenue's appeal partly, holding that Section 11A(2) forms part of Section 11AC requiring equivalent penalty. Since the assessee paid 25% penalty within 30 days, the impugned Tribunal order modifying the status of penalty payment was upheld while allowing the excise duty appeal.

What did the court decide?

The impugned order dated 16 December 2005 was modified to confirm that payment of 25% penalty within thirty days satisfied Section 11AC, and the appeal was allowed accordingly.

the commissioner of central excise-pune-ii Vs m/s s.g. phyto… — Narcotics (NDPS) | Bombay HC (2014)

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1 of 4 CEXA.181.2008

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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CENTRAL EXCISE APPEAL NO.181 OF 2008

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The Commissioner of Central Excise versus M/s.S.G.Phyto Pharma Pvt.Ltd.

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Appellant

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Respondent

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Mr.N.V.Kalantri for Appellant. Mr.Pushkar Patankar for Respondent.

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CORAM : MOHIT S. SHAH, C.J. AND M.S.SANKLECHA, J.

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DATE : 17 February 2014

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PC :

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This Appeal by the Revenue under Section 35G of the Central Excise Act, 1944 (the Act') from the order dated 16 December 2005 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT') was admitted on 27 August 2008 in respect of the following substantial question of law :

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“Whether in the facts and circumstances of the case and in law, the CESTAT Mumbai erred inter alia in holding that Section 11A(2), which is the basis of levy of central excise duty demanded in the present case, is not a part of Section 11AC r/w the relevant Rules framed under the said Act, which clearly stipulate mandatory penalty equivalent to duty payable under Section 11A(2) despite the same being an integral part of Section 11AC and further setting aside the statutory interest applicable under section 11AB?”

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2 of 4 CEXA.181.2008

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The Respondent-Assessee paid central excise duties of Rs.61,496/- and Rs.63,325/- respectively along with interest thereon on 13 August 2001 much before issuance of demand show cause notices dated 23 April 2003. Thereafter, by two orders dated 27 August 2003, the Joint Commissioner of Central Excise, Pune-II confirmed the duty demands of Rs.61,496/- and Rs.63,325/- along with equivalent penalties. The duties demanded were paid prior to the issuance of show cause notices while the penalty @ 25% was paid within thirty days of the order i.e. on 24 September 2003.

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On appeals, the Commissioner (Appeals) by order dated 28 June 2004, set aside the two orders dated 27 August 2003 imposing penalty under Section 11AC of the Act. This was on the ground that no penalties are chargeable where the duty is paid prior to issue of show cause notice.

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On appeal by Revenue, the Tribunal by the impugned order dated 16 December 2005 dismissed the Revenue's appeal upholding the order of Commissioner (Appeals) that no penalty and interest is payable where the duty has been paid before issuance of the notice. The Tribunal by the impugned order dated 16 December 2005 while dismissing the appeal of Revenue, followed its larger bench decision in Commissioner of Central Excise, Delhi-III Vs. Machino Montell (I) Ltd. {2004(62)-RLT-709 (CENSTAT-LB)} and upheld the conclusion of the Commissioner (Appeals) that no penalty is imposeable where duty is paid prior to issue of show cause notice.

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3 of 4 CEXA.181.2008

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Mr.Kalantri, learned counsel appearing for the Revenue submits that in view of the decision of Supreme Court in Union of India Vs. Rajasthan Spinning & Weaving Mills Limited (238-ELT-3), an equivalent penalty has to be imposed under Section 11AC of the Act where the demand is confirmed under Section 11A(2) of the Act. As against the above, while not disputing the above position, Mr.Patankar appearing for the Respondent-Assessee points out that the Assessee had already paid the duties demanded along with interest thereon prior to the issuance of show cause notices dated 23 April 2008. In view of payment of duty and interest having been made prior to issue of show cause notice, the penalty gets reduced to 25% of what is imposed, if paid within thirty days of the order imposing penalties in terms of the second proviso to Section 11AC of the Act. The penalties, as quantified in two orders dated 27 August 2003 of the Assistant Commissioner of Central Excise of Rs.61,496/- and Rs.63,325/-, had been paid to the extent of 25% within thirty days on 24 September 2003. Therefore, the penalty payable under the Act has been paid. Mr.Patankar, learned counsel for the RespondentAssessee states that though the impugned order held no penalty is imposeable, the Assessee has not sought refund of 25% of the penalty amount paid or the interest paid and he further states that the assessee undertakes not to seek refund of the penalty and interest paid.

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In view of the above facts, we are not remanding the matter back to the Tribunal. While partly allowing the appeal of the Revenue, we further direct that the amount of 25% of the penalty imposed having been paid by the Respondent-Assessee within thirty

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4 of 4 CEXA.181.2008

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days of the order imposing penalty (duty and interest paid earlier) is in confirmity with the provisions of Section 11AC of the Act. Therefore, the impugned order dated 16 December 2005 stands modified accordingly.

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We, therefore, allow the appeal in above terms with no order as to costs.

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(CHIEF JUSTICE)

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(M.S.SANKLECHA, J.)

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MST

the commissioner of central excise-pune-ii v. m/s s.g. phyto pharma Pvt. Ltd.

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the commissioner of central excise-pune-ii v. m/s s.g. phyto pharma Pvt. Ltd.

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