CX - There is no merit in contention that merely because person liable to pay duty has discharged duty liability, proceedings against others on whom penalty has been imposed u/r 26 will get concluded - Pre-deposit ordered of penalty: CESTAT
By TIOL News Service
MUMBAI, JUNE 25, 2014: THE proceedings against the main appellant, M/s Giriraj Re-Rolls Pvt. Ltd., Jalna was concluded inasmuch as the said main-appellant had paid the duty demanded along with interest and also 25% of the penalty within the period stipulated.
However, a penalty of Rs.25,000/- was imposed on Shri Satish Nandlal Rathi, Proprietor of M/s Santosh Steel Traders for aiding and abetting the main appellant in evading duty and since the Commissioner(A) upheld the same, the appellant is before the CESTAT.
It is submitted that since the proceedings against the main appellant has been concluded the proceedings against the co-appellants should also be deemed to have been concluded in view of the Tribunal decision in Tikam P.Bhojwani vs. CCE, Ahmedabad. 2011-TIOL-2032-CESTAT-AHM
The Revenue representative submitted that there is no provision in law which extends such benefit and, therefore, the appellant be put to terms.
The following provisions of section 11A (2) of the CEA, 1944 were referred to by the Bench -
"(2) The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder."
The Division Bench then observed -
"6. The said provision applies to the person who has paid the duty liable to be paid by him. Therefore, there is no merit in the contention that merely because the person liable to pay duty has discharged the duty liability, the proceedings against others will also get concluded especially when the proceedings are not under section 11A. Such an interpretation would amount to re-writing of the provisions of sub-section (2) of Section 11A. In this view of the matter we do not agree with the conclusions drawn in the Tikam P.Bhojwani case (supra) by a Single Member Bench of this Tribunal. In the present case, the proceedings have been initiated against the appellant for imposition of penalty under the Central Excise Rules, 2002 for his involvement in aiding/abetting the main-appellant which resulted in evasion of duty. This position is also admitted by the appellant. Therefore, we are of the view that the appellant has not made out any case for complete waiver of the penalty imposed…"
The appellant made an offer to make a pre-deposit of Rs.10,000/- and considering the offer as satisfactory the Bench directed the appellant to pay the pre-deposit within four weeks and report compliance.
In passing sec.38A: Incidentally, the following provisions were inserted w.e.f 13.07.2006 in section 11A of the CEA, 1944 by section 35 of the Taxation Laws (Amendment) Act, 2006 -
(1A) When any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any willful mis-statement or suppression of fact, or contravention of any of the provisions of this Act or the rules made hereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under proviso to sub-section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under section 11AB and penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice.
Provided that if such person has paid the duty in full together with, interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of section 9, 9A and 9AA, be deemed to be conclusive as to the matters stated therein :"
and this apparently was the bedrock of the decision in the Tikam P.Bhojwani case.
It also needs mention that section 11A of the CEA, 1944 was substituted w.e.f 8.04.2011 by section 63 of the FA, 2011.
See also 2013-TIOL-768-CESTAT-MUM & 2014-TIOL-397-CESTAT-MUM.
(See 2014-TIOL-1115-CESTAT-MUM)
