Tribunal after having upheld demand on account of duplicate invoices and delivery challans, not empowered to reduce penalty.

PJ/Case Law /2016-17/3333

Case - 2016 (340) E.L.T. 4
Citation- COMMISSIONER OF C. EX. & CUS., SURAT-I Versus VANDANA ART PRINTS PVT. LTD.
Brief Facts- In the instant matter, special leave to appeal was granted limited to the question of penalty.In this behalf, we may point out that in the Show Cause Notice issued by the Department, three duty demands were raised which were as follows :-
(1)        Duty demand of Rs. 26,94,890/- based on Delivery Challans.
(2)        Duty demand of Rs. 13,49,830/- based on duplicate invoices.
(3)        Duty demand of Rs. 79,39,162/- based on two diaries seized from one Shri Maheshkumar   Satyanarayan Jhawar and on his statement which was recorded during the investigation.

Appellant’s Contention- In terms of Section 11AC of the Central Excise Act (hereinafter referred to as ‘Act’), the penalty has to be equal to the duty so determined.Section 11AC of the Act reads as under :- “11AC. Penalty for short-levy or non-levy of duty in certain cases.- Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined.

Respondent’s Contention- The Show Cause Notice was adjudicated upon and the demands were confirmed and on that basis, penalty equivalent to the duty demand was also imposed. The Tribunal, in appeal, set aside the duty demand of Rs. 79,39,162/- but maintained the other two duty demands. However, on that basis, the penalty is reduced to Rs. 20 lakhs.
Reasoning of Judgement- Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined .Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account.”

Appeal Partly allowed.
Comment – The gist of the case is that the Tribunal after having been upheld demand on account of duplicate invoices and delivery challans, is not empowered to reduce penalty under aforesaid provision in view of its mandatory language so assessee is liable to pay the balance liability of penalty within prescribed time limit
Prepared by- Alakh Bhandari

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PJ/Case Law /2016-17/3333

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