Commissioner of C. Ex., Cus. and Service Tax vs V.V.F. Ltd.

Akil Kureshi, J.—Revenue is in appeal against the judgment of the Tribunal, dated 2-12-2009 2010 (172) ECR 1 63 raising following questions for our consideration:

A Whether in the facts and the circumstances of the case, the Ld. CESTA Tribunal is justified in the eye of law in holding that the penalty u/s 11AC of the C. Ex. Act, 1944 is not imposable, as there is no allegation with supporting evidence regarding suppression of facts, mis-declaration, fraud or collusion, etc. in the show cause notice dtd. 31-5-2004?

B. Whether in the facts and the circumstances of the case, the Ld. CESTA Tribunal is justified in the eye of law in observing that the issue regarding classification of the product - "TETMOSOL" soap is the toilet soap or the medicament has attained the finality by the Order dtd. 13-5-2005 passed by the Ld. CESTA Tribunal, Mumbai whereas the SCA was issued on 31-5-2004 regarding the period from May 2003 to December 2003 and, therefore, it cannot be said that there was any suppression of facts, or willful mis-declaration, fraud or collusion etc., ignoring the earlier OIO dated 26-11-2001 confirmed and upheld by the Ld. CESTA Tribunal ?

C. That the Ld. Tribunal is justified in the eye of law, in the facts and the circumstances of the case, in quashing and setting aside the penalty imposed u/s 11 AC of the C. Ex. Act, 1944 read with Rule 25 of the C. Ex. Rules, 2002, while confirming and upholding the duty amount along with the interest?

D. Whether the imposition of the penalty u/s 11 AC of the C. Ex. Act, 1944 read with Rule 25 of the C. Ex. Rules, 2002, upon the said Assessee-Unit by the Revenue is justified or not, in view of the SCN dtd. 35-0512004 earlier OIO dated 26-11-2001, Ltd. CESTAT''s Orders dtd. 13-5-2005 and dtd. 13-4-2006 ?

Though the questions framed are multiple, issue pertains to penalty u/s 11AC of the Central Excise Act which adjudicating authority imposed and the appellate authority confirmed, but the Tribunal deleted. The Tribunal was prompted to delete the penalty on two grounds. First ground was that even in the show cause notice, there was no allegation of any suppression of facts, misstatement, fraud or collusion, etc. The Tribunal was, therefore, of the opinion that penalty u/s 11AC cannot be imposed. Second ground adopted by the Tribunal was that the issue had not attained finality till the proceedings for penalty were instituted and attained finality only after the order dated 13-5-2005 was passed.

Counsel for the Revenue submitted that the issue had not attained penalty previously and the Tribunal therefore erred in coming to the contrary conclusion in this regard. We are not required to go into this question at all since we find that the Tribunal was perfectly justified in observing that even in the show cause notice there were no allegations that the duty was short-levied or short paid on account of suppression of facts, mis-declaration, fraud, collusion, etc. Section 11 AC of the Central Excise Act permits the Authorities to collect penalty if any duty of excise has not been levied or paid or short levied or short paid or erroneously refunded by reason of fraud, collusion, or willful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty. In the present case, we have in addition to perusing the order passed by the Tribunal also minutely looked at the show cause notice. There is not even allegations of existence of any of that above mentioned factors. Tribunal, therefore, correctly deleted the penalty. Tax Appeal is therefore dismissed.