I O C LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) What is challenged in this petition under Article 226 of the Constitution is the judgment and order dated 23.3.2001 of the Customs Excise & Gold (Control) Appellate Tribunal, New Delhi in Appeal No.E-2628/99-C in so far as the Tribunal only partly allowed the petitioner's appeal to the extent of setting aside penalty of Rs.13,90,86,359.00 levied by the Assessing authority on petitioner -Indian Oil Corporation Ltd..

(2.) In view of the fact that this Court proposes to pass an order of remand to the Tribunal, it is not necessary to set out all the facts in detail. Suffice it to state that by order dated 25.8.1999, the Commissioner of Central Excise levied central excise duty to the tune of Rs.14,36,74,091.00 and an identical sum was directed to be paid by way of penalty under Section 11AC of the Central Excise Act read with Rule 173Q(1) of the Rules. Interest at the rate of 20% per annum was also levied.

(3.) The petitioner-Indian Oil Corporation, a public sector undertaking, had paid the entire amount of excise duty by the time the appeal reached hearing before the Tribunal. The Court is also informed that the petitioner also paid the entire amount of interest levied on the said excise duty. Hence, the challenge before the Tribunal was confined to the propriety of imposition of penalty levied under Section 11AC of the Act. Since the petitioner is a public sector undertaking and was litigating against the Union of India, the case was examined by the Committee on Disputes and the Committee noted that since the petitioner had paid the differential duty and was only contesting imposition of fine and interest relatable to the differential duty payable, the Committee permitted the petitioner to pursue its appeal before the Tribunal. Since interest was already paid before the appeal reached hearing, the Tribunal confined its attention to the legality of the penalty imposed by the impugned order of the Commissioner. The Tribunal noticed that the duty demanded from the petitioner related to the period from April 1994 to September 1998 and that period was required to be divided into two parties - Period Amount of penalty (Rs.) (i) April 1994 to 27.9.1996 13,90,86,359/- (ii) 28.9.1996 to September, 1998 45,87,732/- The Tribunal also noticed that since Section 11AC under which the penalty was imposed was inserted with effect from 28.9.1996, the penalty for the period from 1994 to 27.9.1996 to the tune of Rs.13,90,86,359.00 could not have been levied under Section 11AC and accordingly, the Tribunal set aside that penalty relying on the decision of the Apex Court in CCE, Coimbatore vs. Elgi Equipments Ltd., (2001) 128 ELT 52. The Tribunal thereafter gave the following reasons for upholding the penalty of Rs.45,87,732.00:- (i) Taking note of the total amount of duty evaded, namely, more than Rs.14 crores imposition of penalty of Rs.45,87,732.00 cannot be considered as unconscionable or too harsh; (ii) The attempt of the assessee to show that there was no evasion of duty disentitling claim of Modvat under Rule 57E was not examined on the ground that the Committee on Disputes had permitted only challenge to the legality of penalty and not legality of imposition of duty. The petitioner has, therefore, filed the present petition under Article 226 of the Constitution challenging the order of the Tribunal.