CX - Payment of duty, whether made before or after issuing SCN is not determinative and a relevant factor for deciding whether or not penalty should be imposed u/s 11AC of CEA: High Court
By TIOL News Service
NEW DELHI, MAY 28, 2018: THIS appeal is filed before the High Court against the Tribunal order dated 19th January, 2017- 2017-TIOL-1651-CESTAT-DEL.
The following substantial question of law was framed -
"Whether the Customs, Excise and Service Tax Appellate Tribunal was right in upholding levy of 100% penalty under Section 11AC of the Excise Act, 1944 notwithstanding that the disputed tax was paid by the appellant on or before passing of the order-in-original?"
In its order dated 19 th February 2018, the High Court had declined to interfere with the merits of the case by observing that the findings recorded by the Tribunal are findings of fact, based on statements on oath recorded during the course of search and material physically found which corroborates and confirms the statements made.
Insofar as imposition of penalty u/s 11AC of the CEA, 1944 is concerned, the High Court now noted that mere payment of differential duty would not matter once the conditions for imposition of penalty under Section 11AC was satisfied .
Relying upon the apex court rulings in Dharmendra Textile Processors - 2008-TIOL-192-SC-CX-LB & Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX and the Delhi High Court decision in Prabhat Zarda Factory (I) Private Limited - 2011-TIOL-655-HC-DEL-CX, the High Court observed –
+ Payment of duty, whether made before or after issuing of show cause notice, is not determinative and a relevant factor for deciding whether or not penalty should be imposed under Section 11AC of the Excise Act. This issue is to be decided having regard to the satisfaction or non-satisfaction of the conditions stipulated in Section 11AC of the Act. The pre-conditions which have to be satisfied are fraud, misrepresentation, suppression of facts and contravention of the Act and Rules.
+ Once the conditions mentioned in Section 11AC were fulfilled, then there is no discretion left with the authority concerned to reduce the penalty to an amount less than the duty determined.
+ The appellant does not dispute and does not challenge the conditions mentioned in Section 11AC of the Act were satisfied as the appellant does not contest and submit that fraud, misrepresentation or suppression of facts in contravention of provisions of the Act or the Rules were missing and absent. The facts found are to the contrary and compelling.
+ The counsel for the appellant has accepted that appellant had not paid 25% of the penalty within the stipulated time of 30 days. Therefore, 100% penalty has to be paid by the appellant.
Concluding that the substantial question of law is answered against the appellant and in favour of the respondent, the appeal was dismissed.
(See 2018-TIOL-988-HC-DEL-CX)