Allowed

The Commissioner of Central v. M/S.Sri Ranga Balaji Cotton

Madras HC11 Jul 2014CMA/2972/2007

Case brief

AI extract

What is this about?

The Madras High Court allowed the Revenue's appeal, holding that payment of differential duty does not exempt an assessee from penalty under Section 11AC of the Central Excise Act if the conditions for such penalty are met due to clandestine clearance.

What did the court decide?

The appeal was allowed, the question of law was answered in favour of the Revenue, the Tribunal's order was set aside, and costs were not awarded.

The Commissioner of Central Vs M/S.Sri Ranga Balaji Cotton — Customs and Excise | Madras HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 11.07.2014

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CORAM

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THE HONOURABLE MR.JUSTICE R.SUDHAKAR

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THE HONOURABLE MR.JUSTICE G.M.AKBAR ALI

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CIVIL MISCELLANEOUS APPEAL NO.2972 OF 2007

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The Commissioner of Central Excise, Coimbatore ..Appellant/Respondent

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Vs.

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M/s.Sri Ranga Balaji Cotton Mills,

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S.F.No.45B, Nall Rd., Jallipatti, Udamalpet T.K., Coimbatore.

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The Customs, Excise and Service Tax

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Appellate Tribunal, South Zonal Bench,

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Shastri Bhavan Annex,

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26, Haddows Road, Chennai - 600 006. .. Respondent/Petitio

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APPEAL under Section 35G of the Central Excise Act, 1944 against the Final Order No.480 of 2007 dated 04.05.2007 on the file of the CESTAT against the order of the Commissioner of Customs, Central Excise and service Tax (Appeals) 6/7, A.T.D Street, Race Course Road, Coimbatore 641 018 dated 14.08.2006 and made in Appeal No.100/2006 - C.Ex. and against the order of the Deputy Commissioner of Central Excise Pollachi Division Jothi Nagar 'D" Colony Pollachi, dated 26.10.2005 and made inC.No.V/Ch.52/15/07/05 original S/No.33/2005.

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For Petitioner : Mr.E.Vijay Anand Standing Counsel

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For Respondent: No appearance - R1

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J U D G M E N T

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(Judgment of the Court was delivered by R.SUDHAKAR,J.)

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This Civil Miscellaneous Appeal has been filed against the Final Order No.480 of 2007 dated 04.05.2007 on the file of the CESTAT. This Court, by order dated, 06.12.2007 admitted this appeal on the following substantial question of law:

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"Whether the Tribunal is right in setting aside the mandatory equal amount of penalty that was rightly imposed by the lower appellate forum under section 11AC on a proven ground that the respondents had clandestinely cleared excisable goods?"

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https://hcservices.ecourts.gov.in/hcservices/

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On a perusal of the order of the Tribunal, it is seen that the issue raised in this appeal relates to levy of penalty under Section 11AC of the Central Excise Act. After dispensing with the pre-deposit, the Tribunal disposed of the appeal filed by the assessee at the admission stage itself by relying on the decision reported in 2003 (161) E.L.T. 285 (Rashtriya Ispat Nigam Ltd. V. Commissioner of Central Excise, Visakhapatnam), as affirmed by the Apex Court reported in 2004 (163) E.L.T.A.53 (S.C.) on the ground that the duty was paid by the assessee prior to the issuance of show cause notice. Aggrieved by the said order of the Tribunal, the Revenue has filed the present appeal.

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The Supreme Court in the case of Union of India V. Rajasthan Spinning and Weaving Mills reported in JT 2009 (7) SC 314 = 2009 (238) E.L.T. 3 (S.C.) has clearly held that mere payment of differential duty whether before or after the show cause notice would not alter the situation and they would be liable for penalty in case the conditions for imposing such penalty spelt out in Section 11 AC of the Act are attracted.

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In view of the categorical statement of law by the Supreme Court in the above-stated decision reported in JT 2009 (7) SC 314 = 2009 (238) E.L.T. 3 (S.C.) (Union of India V. Rajasthan Spinning and Weaving Mills), the question of exonerating the assessee from payment of penalty does not arise. Hence, this appeal deserves to be allowed and the question of law has to be answered in favour of the Revenue and the question of law is answered in favour of the Revenue. However, the assessee will be entitled to any other benefit in terms of the proviso to Section 11AC of the Central Excise Act. Accordingly, this Civil Miscellaneous Appeal stands allowed and the order of the Tribunal stands set aside. No costs.

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Sd/Assistant Registrar(CS-IV) Dated: 23.07.2014

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//True Copy// Sub Assistant Registrar sl To The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Shastri Bhavan Annex, 26, Haddows Road, Chennai - 600 006.

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