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High Court upheld penalty u/s 11AC, which was equivalent to duty determined
High Court upheld penalty u/s 11AC, which was equivalent to duty determined
Indoz Polymers manufactured modified starches, and cleared goods from its factory on their own account without payment of duty. Adjudicating authority confirmed the demand and imposed penalty. Tribunal, on Revenue’s appeal, held that interpretation of exemption notification was involved, and imposed penalty. High Court upheld penalty and held that penalty u/s 11AC was equivalent to duty determined.-900169
1. Indoz Polymers manufactured Dextrine and other modified starches.
2. They cleared their goods from their factory on their own account and also on job work basis to their two related trading concerns without bringing into the knowledge of the Department, without taking out registration, without following the procedure and without payment of duty.
3. Show cause notices were issued to the appellants as to why duty should not be demanded and penalty should not be imposed.
4. Adjudicating Authority confirmed demand duty, and dropped further proceedings in the show cause notice, and imposed penalty.
5. The appellants accepted the order of the Adjudicating Authority and did not proceed further.
6. The Tribunal, on Revenue’s appeal, held that interpretation of the exemption notification was involved in the case, and imposed penalty.
7.On appeal, the High Court held as under:
8. The assessees/appellants are before us contending that no penalty could be imposed.
9. However, as the position now stands resolved in view of the Larger Bench decision of the Supreme Court cited supra, the first substantial question of law is answered against the appellants and in favour of the Revenue.
10. Therefore, the plea of the appellants that the Tribunal ought not to have been imposed interest under Section 11AB of the Central Excise Act is misconceived.
11. The penalty under Rule 173Q of the Central Excise Rules is consequent to confiscation of goods, whereas penalty under Section 11AC of the Central Excise Act is equivalent to the duty determined.
12. Therefore, there appears to be no mutual exclusion in relation to levy of penalty under Rule 173Q and Section 11AC.
13. Accordingly, we answer the third substantial question of law in favour of the Revenue and against the assessee.
Case Reference - M/S.Indoz Polymers And Products & Anr vs Customs, Excise and Service Tax Appellate Tribunal & Anr.
Madras High Court
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