COMMISSIONER OF CENTRAL EXCISE Vs. HARISH SILK INDUSTRIES

JUDGEMENT

(1.) In this appeal under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as 'the Act')/the appellant-Commissioner of Central Excise and Customs has challenged the order dated 19th September, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (hereinafter referred to as 'the Tribunal') in Appeal No. E/1/2005. While admitting the appeal, this court had, by an order dated 23rd June, 2009 framed the following substantial question of law:-

(2.) A show-cause notice dated 26th June, 2003 came to be issued to the assessee alleging that in terms of Rule 8 of the said rules, the defaulter was required to pay duty from account current (PLA) and not from deemed credit and in the event of any such failure, the clearances would be deemed to have been made without payment of duty and the consequences for penalty under the Central Excise Rules, 1944 would follow. The assessee was, accordingly, called upon to show cause as to why duty to the tune of Rs. 9,11,772/- under Rule 8 of the Rules and Section 11A of the Act, interest at the rate of 24% per annum under Rule 8(3) and penalty under Rule 25 of the Rules should not be imposed. The adjudicating authority by an order dated 16th February, 2004 held that the assessee was liable to pay Central Excise duty amounting to Rs. 9,11,772/- and further imposed penalty of Rs. 9,11,772/- on the assessee under Rule 25 of Rules. Being aggrieved, the assessee carried the matter in appeal before the Commissioner (Appeals) who, by an order dated 21st September, 2004, held that as the assessee had forfeited the facility of monthly payment of duty in terms of Rule 8 of the Rules, it was obliged to pay the entire amount of duty from its PLA (Account Current) during the said period. The Commissioner (Appeals) further found that the assessee having failed to comply with the provisions of Rule 8, it was liable to pay interest under Rule 8(3) of the Rules. Before the Commissioner, it was contended that if the assessee was required to make payment of duty from the PLA, they should be allowed to take re-credit of the amount paid as duty from their deemed credit account. The said request of the assessee was accepted and it was permitted to take re-credit of the amount of Rs. 9,11,772/- from its deemed credit account. It was also contended on behalf of the assessee that there was no intention to evade payment of duty and as such, there was no reason to impose penalty under Rule 25 of the Rules. The Commissioner (Appeals) was of the view that there is no requirement of mala fide intention for imposition of penalty under Rule 25(1)(a) of the Rules and accordingly held that the assessee was liable to pay penalty under Rule 25 for contravention of Rule 8 of the Rules. The assessee carried the matter in second appeal before the Tribunal.

(3.) The Tribunal, by the impugned order, set aside the order of Commissioner (Appeals) by placing reliance upon the decision of the Bombay High Court in the case of Lloyds Steel Industries Limited v. Union of India, 2005 183 ELT 351 and allowed the appeal.