CX - Clandestine removal of Terpene - Once demand is confirmed, imposition of penalty u/s 11AC is mandatory and automatic - contention of appellant that adjudicating authority had not imposed any penalty is clearly wrong: CESTAT
By TIOL News Service
MUMBAI, MAY 05, 2015: THE applicant M/s Tien Yuan India Pvt. Ltd. filed an application for rectification of mistake purportedly made by the CESTAT in the final order dated 05/11/2014 2014-TIOL-2860-CESTAT-MUM. It is contended by the appellant that upholding of penalty of Rs.1,55,105/- on the appellant under/Section 11AC of the Central Excise Act, 1944 is an error apparent on the face of the records.
The reason attributed is that no penalty was imposed on the applicant by the adjudicating authority in the order appealed against. Furthemore, the Member (Judicial) has disagreed with Member (Technical) and has held that no penalty under Section 11AC is imposable on the applicants and its directors and the 3rd Member, Member (Technical) who heard the difference of opinion has also not imposed any penalty on the appellant on the alleged removal of Terpene without payment of duty.
The Bench after perusing the records observed -
++ As regards the contention that the adjudicating authority did not impose any penalty of Rs.1,55,105/- in respect of Terpene cleared without payment of duty, this contention is clearly wrong. In the order appealed against, the adjudicating authority, in para 194, in clause (v) thereof has confirmed recovery of Cenvat credit of Rs.22,13,22,732/- under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act. In clause (vi) of the said order, he has further confirmed a Central Excise duty amounting to Rs.1,55,105/- in respect of Terpene cleared without payment of duty under the first proviso to Section 11A of the said Central Excise Act. In clause (viii) he has confirmed a penalty of Rs.22,14,77,837/- under Rule 15 (2) read with Section 11AC which is the sum total of the demands confirmed of (Rs.22,13,22,732/- + Rs.1,55,105/-) Rs.22,14,77,837. In other words, while confirming the penalty, the adjudicating authority has taken into accounts the sum of Rs.1,55,105/- in respect of Terpene cleared clandestinely. Therefore, the contention of the appellant in this regard is clearly wrong.
++ As regards the contention that the Hon'ble Member (Judicial) has held that no penalty is imposable on the company as well as the directors under Section 11AC, this observation pertains to his findings that Cenvat credit of Rs.3,93,78,240/- is available to the appellant. In his order, the Hon'ble Member (Judicial) has not given any contrary findings as to the confirmation of demand of Rs.1,55,105/- in respect of clandestine clearance of Terpene by the appellant or to the imposition of penalty of equivalent amount on the appellant. The said demand has been confirmed under the first proviso to Section 11A (1) of the Central Excise Act, 1944, that is, alleging suppression, wilful mis-statement of facts, etc. with an intent to evade duty. Once the demand is confirmed invoking the said proviso, imposition of penalty under Section 11AC is mandatory and automatic. Further in the summing up portion, the learned Member (Judicial) has clearly agreed that the duty demand of Rs.1,55,105/- for clearance of Terpene clandestinely is sustainable. If that be so, in the absence of a contrary decision by the Hon'ble Member (Judicial), it cannot be said that he has waived the penalty of equivalent amount on the appellant, which is a mandatory provision.
Holding that there is no merit in the application for rectification of mistake, the same was dismissed as being devoid of merits.
(See 2015-TIOL-799-CESTAT-MUM)
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