The central legal point established in the judgment is the element of strict liability on the assessee for concealment or inaccurate particulars while filing returns under the relevant provisions.

JUDGMENT

S.H. Kapadia, J. - Delay condoned.

2. Leave granted in special leave petitions.

3. In this batch of civil appeals, the question which arises for determination is whether Section 11AC of the Centra). Excise Act, inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evade payment of tax, should be read to contain mens rea as an essential requirement.

4. According to the department, the said section should be read as penalty for statutory offences; that the executing authority had no discretion in the matter of penalty and that the adjudicating authority in such cases was duty bound to impose penalty equal to the duty so determined. On the other hand, it is the case of the assessee that mens rea was an essential requirement of the said section particularly when the section refers to intention in the matter of evading payment of duty. The assessee has also invited our attention, in this connection, to the provisions of Section 271(l)(c) of the Income Tax Act which according to the assessee is identically worded to Section 11AC of the Central Excise Act. The assessee has also placed reliance on a recent judgment of the Division Bench of this Court in the case of Dilip N. Shroff v. Jt. CIT 2007 (8) SCALE 304, decided on 18th May, 2007.

5. At this stage, we may mention that in the present cases, we are also concerned with interpretation of Section 3A of the Central Excise Act and Rule 96ZQ(5) of the Central Excise Rules which refers to failure on the part of an independent processor to pay duty by specified date. In this connection, it is the case of the department that Clause (5) of Rule 96ZQ specifically refers to payment of penalty equal to amount of duty outstanding from the assessee. It is the case of the department that penalty under the said rule is also for statutory offences; that it is not a case of imposition of penalty and that it is not a case where the adjudicating authority has any discretion in the matter of imposition of penalty. In this connection, reliance is placed by the department on the judgment of the Division Bench of this Court in the case of Chairman, SEBI v. Shriram Mutual Fund and Anr. On the other hand, it is the case of the assessee that even Rule 96ZQ (5) should be read down so as to include the requirement of mens rea into Clause (5) of Rule 96ZQ particularly when the said clause begins with the expression "if any independent processor fails to pay the amount of duty". In this connection, the assessee once again placed reliance on the judgment of the Division Bench of this Court in the case of Dilip N. Shroff v. Jt. CIT (supra).

6. We quote hereinbelow the provisions of Rule 96ZQ(5):

96ZQ. Procedure to be Mowed by the independent processor textile fabrics, (l) to (4) (5) If an independent processor fails to pay the amount of duty or any part thereof by the date specified in sub-r. (3), he shall be liable to.

(i) pay the outstanding amount of duty along with the interest at the rate of thirty-six per cent per annum calculated for the outstanding period on the outstanding amount; and

(ii) a penalty equal to an amount of duty outstanding from him or rupees five thousand, whichever is greater. We also quote hereinbelow the provisions of Section 11 AC of the Central Excise Act:

Section 11 AC. 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:

Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal