The Commissioner of Custom and Central Excise vs IFB Industries Ltd.

S.B. Deshmukh, J.—We have heard learned Counsel Ms. S. Linhares for the Appellant and Mr. H.K. Maingi for the Respondent.

The Respondent, in this appeal is a manufacturer of washing machines and dryers. The Respondent has been availing the CENVAT/MODVAT provided under Rule 57 A of the Central Excise Rules, 1944 (hereinafter referred as the "said Rules"). The Respondent filed a price declaration of the semi finished washing machines with the Superintendent of the Central Excise. It was noticed by the Appellant during carrying out the audit of the company that the goods were under valued and willfully suppressed the facts. Show cause notice dated 08-05-2001, claiming the short payment of central excise duty, amounting to Rs. 31,516/-was served to the Respondent. It is not disputed by the Respondent that show cause notice was issued. Said notice has been replied on 25-06-2001 by the Respondent. The Joint Commissioner of Customs and Central Excise passed an order on 26-09-2001. By this order, the Respondent was directed to pay an amount of Rs. 31,516/-under the said Act. The Respondent aggrieved by the order passed preferred an appeal before the Commissioner of Appeals. The appeal filed on behalf of the Respondent was considered. The order passed by the Joint Commissioner was upheld by the Appellate Authority. The Respondent thereafter preferred an appeal before the Central Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT upheld the duty payable by reducing penalty to Rs. 15,000/-. In other words, amount of Rs. 31,516/-imposed on the Respondent has been reduced to Rs. 15,000/-. The revenue/Appellant against order passed by the authority concerned in Appeal No. E/1289/02 preferred this appeal before this Court.

This appeal was listed for admission before this Court. Order passed by this Court on 05-09-2005, records "Admission" of this appeal on the following substantial question of law:

Whether the equivalent amount of penalty imposed u/s 11AC of the Central Excise Act, 1944 could be modified or altered by Custom Excise and Service Tax Appellate Tribunal (CESTAT) without finding any fault on the quantum of demand duty confirmed by the adjoining authority.

We have heard learned Counsel for the respective parties. Learned Counsel for the Appellant/revenue states that issue is now no more in existence as the issue has been answered by the Hon''ble Supreme Court. The judgment of the Hon''ble Supreme Court in the matter of Union of India (UOI) and Others Vs. Dharamendra Textile Processors and Others, is made available to us. With the assistance of the learned Counsel for the respective parties, we have noticed paragraph 2 of the Judgment. Reference is made to paragraph 2 of the Judgment. Provisions laid down u/s 11AC of the said Act and Rules relevant, have been considered by the larger Bench. Reference is answered by the Hon''ble Supreme Court at paragraph 27 of the Judgment.

We have considered the judgment of the Hon''ble Supreme Court. The Respondent in the case on hand was directed to pay an amount of Rs. 31,516/-by the Joint Commissioner. Ultimately, duty was upheld by the Appellate Authority. However, penalty has been reduced from Rs. 31,516/- to Rs. 15,000/-.

In the case on hand, duty has been upheld by the authority concerned. However, penalty has been reduced from Rs. 31,516/-to Rs. 15,000/-which is impermissible. In other words, penalty also has to be the same amount. In view of this, impugned order in this appeal needs to be quashed and set aside.

In this case penalty is reduced to Rs. 15,000/-. This part needs to be quashed and set aside with direction to the Respondent to pay the amount to the tune of Rs. 31,516/-.

Appeal is partly allowed and disposed of. Impugned order reducing penalty from Rs. 31,516/-to Rs. 15,000/-is quashed and set aside. Respondent shall make payment of Rs. 31,516/-towards penalty within 12 weeks from today.