Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1159

Penalty under Rule 25 & 26 - sustainability of

Case: VVF Limited Vs. Commissioner of Central Excise, Belapur
 
Citation: 2011(267) E.L.T. 134 (Tri. Mumbai)
 
Issue:- Penalty imposed under Rule 25 & 26 cannot be imposed if there is no mens rea to evade payment of duty.
 
Brief Facts:- Appellant’s firm is 100% EOU and sought clearance of their finished goods in DTA w.e.f. April 2005. Thereafter, Appellant started clearing their goods in DTA following the procedure of Rule 8 of the Central Excise Rules, 2002 by paying duty by 5th of following month under which the duty is payable. The appellants also filed returns regularly with the Department. The appellants cleared goods under the duty paid invoices but the only allegation against them was that they have not paid the duty at the time of clearance of their goods under Rule 17 of the Central Excise Rules, 2002. The department detained their goods on 29.03.2006 which were cleared by them against the central excise duty paid invoice but duty of the same was not paid to the Government. The goods were confiscated and released under the provisional bond.
 
Show cause notice was issued to the appellants for confiscation of the said goods and imposition of penalty on the appellants. The Adjudicating Authority confirmed the confiscation and allowed the said goods to be redeemed on payment of fine and penalties (equivalent to duty) under Rule 25 of the Central Excise Rules, 2002 was imposed on the appellant and penalty under Rule 26 of Central Excise Rules, 2002 was imposed on the Dy. General Manager of the appellant. Aggrieved by the said imposition of penalties, the appellants are before the Tribunal.
 
Appellants Contention:- The appellant submitted that the appellant is an EOU and therefore, they have got permission to clear their goods in DTA is April 2005 and have cleared their goods under Rule 8 by paying duty by 5th day of the following month in which their goods were cleared. In fact they were not aware of the Rule 17 wherein the goods are to be cleared after paying duty.  The appellant also submit that there was no intention to clear the goods clandestinely and there was no such charge in the show cause notice. The appellants submitted that as they were paying duty regularly on the monthly basis and have shown in the returns also, the Revenue has not pointed out the mistake to them. Moreover, all the invoices against which the goods were cleared, the duty of Central Excise was shown as payable. In the absence of any mens rea, no penalty is leviable on them. The appellant further submitted that in this case, no specific provision of Rule 25 has been prescribed in the show cause notice for imposing penalty on the firm, hence no penalty can be levied on them. To support their contention, appellant placed reliance on judgments in Amrit Foods Vs. Commissioner of Central Excise, U.P. [2005 (190) E.L.T. 433 (SC)] and J.K. Corporation Ltd. Vs. CCE, Bhubaneswar [2007 (210) E.L.T. 501 (Ori.)]. The appellant further submitted that as per Section 11A, sub–section 2 (B) of the Central Excise Act, 1944 they have paid the duty before the issuance of Show Cause Notice, hence no penalty is imposable on them.
 
Respondents Contention:- Revenue submitted that charges have been framed clearly against the appellants and no mentioning of the said clause under which the penalty is to be imposed is not relevant when the same is clear from the charges alleged against in the show cause notice. Moreover, the judgement relied on by the appellant are not on the identical facts as in this case. The respondent also submit that the Original Authority has clearly held that the appellant is liable for penalty under Rule 25 (1) (a) of the Central Excise Rules 2002 which is not in the case of judgement relied upon by the appellant. Revenue further submitted that the conduct of the appellants says that they are having mala fide intention of not paying duty in time, hence the provision of Rules 25 and 26 ibid are attractable to this case.
 
Reasoning of Judgment:- The Tribunal held that the fact that the appellant are 100% EOU and sought permission to clear their goods in DTA with effect from April 2005 are not in dispute. It is also not in dispute that the appellants are paying duty on monthly basis as per Rule 8 and filing their Returns regularly. It is also not in dispute that the appellants are not issuing duty paid invoices and the same has been sown in the monthly returns as ‘Duty payable’. The only allegation against the appellants is that they are not paying duty at the time of clearance as per Rule 17 of the Central Excise Rules, 2002. It was held that when it is not alleged that there is any intention of the appellants to evade payment of duty, in that event, the allegation of mens rea cannot be alleged against the appellants. In that event and in the absence of any mens rea, penalty under Rule 25 is not impossible on the appellants as held by the High Court of Punjab and Haryana in the case of Commissioner of Central Excise, Chandigarh Vs. Sadashiv Ispat Ltd. [2010 (256) E.L.T. 349 (P&H)]. The Tribunal also held that the goods are liable for confiscation. Hence, penalty under Rule 26 of the Central Excise Rules, 2002 is also not leviable on the appellant. Impugned order set aside.
 
Decision:- Appeal allowed with consequential relief. 

************

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com