Commissioner of Central Excise vs Saluja Exim. Ltd. and Others

Sanjay Karol, J.—Appeal was admitted on the following substantial question of law:--

"Whether the penalty under Rule 13(1) of CENVAT Credit Rules, 2002 was to be imposed even if there was no mens rea on the part of the assessee?

It is a common case of learned counsel for the parties that the question of law is no longer res-integra, as it stands decided by the Hon''ble Supreme Court of India in Commnr. of Central Excise, Chandigarh Vs. Pepsi Foods Ltd., (2011) 183 ECR 180 : (2010) 260 ELT 481 : (2011) 1 SCC 601 : (2011) 30 STT 284 ; wherein it has been held that:--

"It is well settled that when the statues create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires "mens-rea" as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible.

The court in this connection may remind itself of the fundamental principle: (AC P. 496 E)

"...that an accused person cannot be convicted without proof of mens rea, unless, from a consideration of the terms of the statute and other relevant circumstances, it clearly appears that must have been the intention of Parliament."

(See the decision of the House of Lords in Vane v. Yiannopoullos and the opinion of Lord Reid at AC p.496 E: ALL ER P.823).

In Vane, the word "knowingly" was used in the statute as a condition of creating liability.

The aforesaid dictum of Lord Reid has been followed by this Court also. A reference in this connection may be made to Union of India V. Rajasthan Spg. and Wvg. Mills. This court considering Section 11-AC of the Act held in ELT para 19 at P.12 of the Report as follows (SCC P.459, para 29)

"29. From the aforesaid discussion it is clear that penalty under Section 11-AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section."

(emphasis supplied).

In view of the settled position of law, no other and further order is required to be passed in this appeal.

Appeal is disposed of accordingly. Pending applications, if any also stand dispose of.