Dismissed

The Commissioner, Central GST and Cx v. M/S Devyani Processors Pvt. Ltd.

Gujarat HC17 Oct 2019TAXAP/709/2019

Case brief

AI extract

What is this about?

The Gujarat High Court dismissed the tax appeal against the Customs, Excise and Service Tax Appellate Tribunal's order. The Court held that the mandatory penalty under section 11AC was not imposable as the adjudicating authority recorded a categorical finding of no fraud or collusion with intent to evade duty. Consequently, no legal infirmity existed in the impugned order.

What did the court decide?

The appeal was summarily dismissed, upholding the Tribunal's order levying Rule 25 penalty without Section 11AC penalty.

The Commissioner, Central GST and Cx Vs M/S Devyani… — GST and Indirect Tax | Gujarat HC (2019)

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C/TAXAP/709/2019 ORDER

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/TAX APPEAL NO. 709 of 2019

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THE COMMISSIONER, CENTRAL GST AND CX

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Versus M/S DEVYANI PROCESSORS PVT. LTD.

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Appearance:

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VIRAL K SHAH(5210) for the Appellant(s) No. 1 for the Opponent(s) No. 1

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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI

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and HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

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Date : 17/10/2019 ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)

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By this appeal under section 35G of the Central Excise Act, 1944, the appellant has challenged the order dated 5.3.2019 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad (hereinafter referred to as “the Tribunal”) in Appeal No.E/1066/2010-DB by proposing the following two questions, stated to be substantial questions of law:-

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“(1) Whether learned Commissioner, in the facts and circumstances of the case, was right in exercising his discretion, which otherwise is not contemplated, for not imposing penalty as stipulated under section 11AC of the Central Excise Act despite he has held liability under section 11A of the Act?

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(2) Whether Appellate Tribunal erred in not assigning cogent and independent reasons, while upholding the order of the learned Commissioner, or in other words, whether Appellate Tribunal has committed breach of principle of natural justice by not assigning the reasons

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Page 1 of 4

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C/TAXAP/709/2019 ORDER

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while passing impugned order?”

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The facts stated briefly are that the respondent is a 100% EOU, which cleared certain consignments under ARE-3 against CT-3 certificate to another EOU. However, due to cancellation of the order, such goods were diverted to domestic tariff area after obtaining permission from the Deputy Commissioner. In respect of the clearance of goods to the domestic tariff area, a demand of Rs.2,44,36,542/- came to be raised which was confirmed by the adjudicating authority and penalty of Rs.60,00,000/- was also imposed under rule 25 of the Central Excise Rules, 2002. Being aggrieved, the appellant preferred an appeal before the Tribunal seeking imposition of penalty of equal amount of duty under section 11AC of the Central Excise Act, 1944 (hereinafter referred to as “the Act”). By the impugned order, the Tribunal has upheld the order passed by the adjudicating authority and has dismissed the appeal.

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Mr. Viral Shah, learned senior standing counsel for the appellant, submitted that the Tribunal has erred in holding that the mandatory penalty under section 11AC is not imposable on the respondent. It was submitted that the respondent had initially cleared excisable goods during July, 2003 under ARE-3 against CT-3 certificate to M/.s Neeraj Exim (P) Ltd. It was submitted that the respondent was required to produce a warehousing certificate duly endorsed by the consignee and countersigned by the Superintendent in charge of the consignor within a period of ninety days from the date of removal of the goods. However, the respondent failed to do so. It was submitted that the respondent had not submitted the warehousing certificate nor intimated the department about the diversion of the excisable goods till the Superintendent in

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Page 2 of 4

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C/TAXAP/709/2019 ORDER

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charge of the consignee vide letter dated 13.1.2004 informed that there is no intimation from the consignee regarding receipt of the goods against CT-3s under the AR-3 issued by the respondent. It was submitted that, therefore, the respondent had suppressed the material facts from the department, and hence, the adjudicating authority was not justified in not imposing penalty under section 11AC of the Act and the Tribunal was not justified in upholding the order passed by the adjudicating authority.

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A perusal of the order-in-original reveals that the adjudicating authority has recorded that despite the fact that the respondent had failed to produce re-warehousing certificates in respect of AR-3s duly countersigned by the jurisdictional Range Superintendent of Central Excise in-charge of the EOU viz. M/s. Neeraj Exim (P) Ltd. within the stipulated period of ninety days from the date of removal from the factory, the said lapse stood condoned/regularised, inasmuch as, post facto permission to dispose of the goods covered thereunder was given to the unit. The adjudicating authority has given a categorical finding that there was no fraud, collusion or any mis-statement or suppression of facts on the part of the respondent with intent to evade payment of central excise duty and consequently, no penalty under section 11AC of the Act was warranted. The adjudicating authority has, accordingly, levied penalty under rule 25 of the Central Excise Rules, 2002.

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The Tribunal in the impugned order has concurred with the findings of fact recorded by the adjudicating authority and has accordingly upheld the levy of penalty under rule 25 of the

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Page 3 of 4

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C/TAXAP/709/2019 ORDER

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Central Excise Rules, 2002.

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From the facts noted hereinabove, it is apparent that the adjudicating authority has recorded a categorical finding of fact that there was no fraud, collusion or any mis-statement or suppression of facts on the part of the respondent with intent to evade payment of central excise duty. On a plain reading of the provisions of section 11AC of the Act, it is evident that the condition precedent for invoking the said provision is that there should be fraud, collusion or any mis-statement or suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty. In the facts of the present case, in the light of the concurrent findings of fact recorded by the adjudicating authority the condition precedent for invoking the provisions of section 11AC of the Act is not satisfied. Under the circumstances, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law, warranting interference.

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The appeal, therefore, fails and is, accordingly, summarily dismissed.

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(HARSHA DEVANI, J)

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(SANGEETA K. VISHEN, J)

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Z.G. SHAIKH

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Page 4 of 4

The Commissioner, Central GST and Cx v. M/S Devyani Processors Pvt. Ltd.

Case brief

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What did the court decide?

The Commissioner, Central GST and Cx v. M/S Devyani Processors Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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