COMMR. OF C. EX. Vs. ALSTHOM INSTRUMENT TRANSFORMERS

JUDGEMENT

(1.) In all these appeals, a common question of law is involved. Therefore, they are taken up together for consideration and disposed of by this common order. The question involved is, "whether the assessee is liable to pay interest and penalty in respect of the duty paid prior to the issue of a show cause notice to payment made after the due date?" Both the Appellate Authority and the Tribunal relying on the earlier judgments, held that it is settled law that once the duty is paid prior to the issue of show cause notice, no interest and no penalty is liable to be paid. The said order was upheld by this Court.

(2.) The Revenue preferred an appeal to the Apex Court. The Apex Court in the case of Union of India v. Dharamendra Textile Processors, 2008 231 ELT 3 hearing of batch of appeals from all over the country, where the payment of penalty was involved, has held that when once the condition stipulated in Section 11AC is established, imposition of penalty is automatic. There is no scope for any discretion. The levy of penalty is mandatory. After laying down the said law, the judgments of the High Court were set-aside and the matters were remanded back to the High Court for fresh disposal in the light of the aforesaid judgment. After the judgment in Dharamendra's case, in almost every case relating to penalty, the Revenue was contending that the Apex Court has laid down that in every case of non-payment or short payment of duty, the penalty clause get automatically attracted and the authority has no discretion in the matter.

(3.) Further, the Apex Court in the case of Union of India v. Rajasthan Spinning and Weaving Mills, 2009 238 ELT 3, after examining the law laid down by the Apex Court in Dharamendra Textiles case held that they failed to see how the decision in Dharamendra Textiles' case can be said to hold that Section 11AC of the Act would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the Section for its application. Further, they held that the decision in Dharmendra Textiles' case must therefore, be understood to mean that though the application of Section 11AC of the Act would depend upon the existence or otherwise of the conditions expressly stated in the Section, once the Section is applicable in a case, the concerned authority would have no discretion in quantifying the amount of penalty. It must be imposed equal to the duty determined under sub-section (2) of Section 11 of the Act. Therefore, imposition of penalty is not automatic. Only if the conditions prescribed in Section 11AC of the Act is fulfilled, then there is no discretion left with the authority except imposing penalty.