Commissioner of Central Excise vs Kapoor Industries

None appears for the Respondent though served (as indicated in the affidavit-of-service of R.J. Joshi dated 7 August 2007). Heard the learned counsel for the Appellant-Revenue. This appeal is filed by the Revenue from order dated 6 December 2006 of the Customs, Excise and Service Tax Appellate Tribunal (''the Tribunal''). The following question of law is raised in this appeal:

Whether in the facts and circumstances of the case and in law, the Tribunal is justified in reducing the penalty imposed u/s 11AC of the Act having regard to the mandatory language of Section 11AC of the Act?

On 10 July 2008, this appeal was ordered to be heard along with Central Excise Appeal No. 195 of 2006 which involves an identical question of law. Learned counsel for the Appellant has placed before us an order dated 18 June 2009 of this Court in the said appeal allowing the appeal by way of remand to the Tribunal.

This Court in its order dated 18 June 2009 in Central Excise Appeal No. 195 of 2006, after considering the decisions of the Supreme Court in Union of India v. Dharmendra Textile Processors 2007 (215) ELT 321 and in Union of India (UOI) Vs. Rajasthan Spinning and Weaving Mills, set aside the order of the Tribunal and remanded the matter to the Tribunal for de novo disposal of the appeal in accordance with law in light of the judgment of the Supreme Court referred above. It needs to be noted that this Court remanded the matter to the Tribunal because it was contended on behalf of the assessee/appellant that mandatory penalty cannot be imposed as there was no intention to evade the payment of penalty.

In the present case, the Tribunal has upheld a finding of fact of the authorities below that there was an intention on the part of the assessee to evade payment of duty on due date. Thus, equivalent penalty u/s 11AC of the Act was warranted. However, purporting to exercise its discretion, the Tribunal has by the impugned order reduced the penalty from Rs. 1,02,487/- to Rs. 50,000/-.

However, in the present facts and circumstances of the case, we are of the view that there is no need of remand as authorities under the Act have already given a finding of fact that there was an intention to evade the duty on the part of the Respondent-Assessee.

The Supreme Court has held in Rajasthan Spg. and Wvg. Milk (supra) that the adjudicating authority has no discretion to impose a lesser penalty than the amount of tax demanded on invocation of proviso to Section 11A of the Act. As this imposition of penalty is mandatory, we allow the appeal, set aside the impugned order dated 6 December 2006 of the Tribunal and restore the penalty imposed by the order dated 6 February 2006 of the adjudicating authority and as confirmed by the Commissioner of Central Excise (Appeals) in order dated 21 June 2006. The appeal is accordingly allowed with no order as to costs.