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Judgment
Indira Banerjee, J.—On or about 11th March, 1999, the Officers of the Director General, Anti Evasion (Central Excise), Kolkata Zonal Unit raided the office and factory premises of the petitioners and seized incriminating documents.
Thereafter summons were issued to the petitioners, in response to which the authorized representatives of the petitioners appeared and made submissions.
A show cause notice dated 30th September, 1999 was issued to the petitioner by the Joint Director, Directorate General, Anti Evasion (Central Excise), Kolkata Zonal Unit, calling upon the petitioners to show cause why Central Excise Duty amounting to Rs. 6,75,257/- should not be imposed in terms of Section 11A of the Central Excise Act, 1944 on 65053.75 Kgs of finished goods cleared by the petitioners from their factory during the period 1998-99. The petitioners were also required to show cause why penalty u/s 11AC and interest u/s 11AB should not be imposed on the petitioners.
The petitioners duly replied to the aforesaid show cause notice, by a letter dated 5th October. 1999, inter alia contending that even before issuance of the show cause notice, the petitioners had voluntarily deposited Rs. 13,50,516/- on account of Central Excise Duty together with interest and penalty. It was contended that a sum of Rs. 13,50,516/- was deposited in two instalments, the first on 14th April, 1999 and the second on 23rd September, 1999.
The Joint Director, Directorate General, Anti Evasion (Central Excise), Kolkata Zonal Unit gave the petitioners a personal hearing on 17th December, 1999. The representative of the petitioners, one, Mr. Siddhartha Roy, appeared and made submissions.
By an order dated 1st February, 2001, the Joint Commissioner of Central Excise-II, confirmed the duty demand of Rs. 6,75,257.93, imposed penalty also of Rs. 6,75,257.93, that is, 100% of the duty of Rs. 6,75,257.93 demanded and interest at the rate of 24% on the said duty of Rs. 6,75,257.93. The petitioners claim to have received the order, dated 1st February, 2001, on 4th February, 2001.
In the meanwhile, with effect from 12th May, 2000, Section 11AC of the Central Excise Act, 1944 has been amended by the Finance Act, 2000. Section 11AC as amended, provided that where duty as determined u/s 11A(2) and interest payable thereon u/s 11AB was paid within 30 days from the date of communication of the order of assessment, the amount of penalty liable to be paid by the assessee, would be 25% of the duty so determined.
The petitioners contend that the petitioners had duly deposited full amount of Excise Duty together with statutory interest on 14th April, 1999 and 23rd September, 1999 by way of deposit of Rs. 13,50,516/-. The aforesaid deposit was made even before issuance of formal demand notice by the concerned authorities.
It was argued that on the date of passing of the order dated 1st February, 2001, the amount of Central Excise Duty including the interest payable thereon had already been deposited by the petitioners. The adjudicating authority wrongfully and illegally imposed 100% penalty of Rs. 6,75,257.93 upon the petitioners u/s 11AC of the 1944 Act.
By a letter dated 9th February, 2001, the petitioners made a representation for refund and/or remission of 75% of the penalty of Rs. 6,75,257/93 in view of the amendment of Section 11AC. The petitioners thereafter sent reminders from time to time praying for reimbursement of 75% of the penalty amount.
By a subsequent letter dated 6th August, 2001, the petitioners modified their claim of refund after calculating and adjusting the interest liability on the amount of duty paid.
On or about 24th August, 2001, the petitioners received a show cause notice dated 14th August, 2001 alleging that the petitioners had failed to pay interest on delayed payment of duty as per the order dated 1st February, 2001, within 30 days from the date of communication of the said order.
The petitioners were required to show cause why the refund claim of the petitioners should not be rejected and interest as applicable not recovered from the petitioners.
The petitioners replied to the show cause notice, by a letter dated 27th August, 2001. A personal hearing was granted on 4th September, 2001.
On or about 7th September, 2001, the petitioners received an order dated 7th September, 2001 of the Deputy Commissioner of Central Excise, Howrah North Division rejecting the claim of the petitioners for refund.
In passing the said impugned order, the Deputy Commissioner proceeded on the basis that no decision could be taken contrary to the order of 1st February, 2001 which had assumed finality, there being no appeal therefrom. Against the aforesaid order dated 7th September, 2001 of the Deputy Commissioner of Central Excise, the petitioners preferred an appeal before the Commissioner of Central Excise, Appeal II. After hearing the petitioners and the Department, the Commissioner of Central Excise, Appeal II passed an order dated 29th September, 2008 rejecting the appeal.
Aggrieved by the order in appeal dated 29th September, 2003, the petitioners filed an appeal being Appeal No. ESM 80/05 before the Customs Excise and Service Tax Appellate Tribunal, hereinafter referred to as the CESTAT. The appeal has been dismissed by an order dated 27th July, 2005.
The short question involved in this writ application is whether 100% penalty could have been imposed on the petitioners notwithstanding the fact that the disputed duty had been paid before issuance of the show cause notice.
On behalf of the Revenue, Mr. Chatterjee rightly argued that the petitioners had deposited the disputed duty after the search and seizure at the factory and office premises of the petitioners and detection of evasion. It could not, therefore, really be said that the deposit was voluntary.
Moreover, as rightly argued by Mr. Chatterjee, Section 11AC of the Central Excise Act, 1944 was amended by the Finance Act, 2000 with effect from April, 2000. The evasion took place during the financial year 1998-99. The show cause notice was also issued on 30th September, 1999, before the amendment. The amendment of Section 11AC is prospective and not retrospective. The amendment has no application in the instant case.
The judgment in Union of India (UOI) and Others Vs. T.P.L. Industries Ltd., ) related to a show cause notice issued after amendment of Section 11AC. The judgment has no application in the facts of this case.
In Collector of Central Excise, Kanpur Vs. Flock (India) Pvt. Ltd. C-7, Panki Industrial Area, Kanpur, the Supreme Court held that where no appeal was preferred from an appealable order, the order could not be challenged by the assessee in an application for refund. In the instant case, the petitioners did not challenge the order dated 1st February, 2001. The said order became binding on the petitioners.
This Court exercising jurisdiction under Article 226 of the Constitution of India does not sit in appeal over adjudication orders and/or appellate orders. There is no such infirmity and/or illegality in the impugned orders that warrants interference under Article 226 of the Constitution of India.
The writ application is thus dismissed.