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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
AJAY KUMAR MITTAL, AMIT RAWAL, JJ.
M/s Kay Iron Works (Jorian) Private Limited - Appellant
Versus
Commissioner of Central Excise - Respondent
CEA No. 98 of 2014
Decided On : 24-07-2017
CEA - Central Excise Act, 1944 - Section 35G - Rule 25 of the Central Excise Rules, 2002 - Summary: The court addressed the issue of penalty under Rule 25 of the Central Excise Rules, 2002 and discussed the applicability of penalty even in cases where no goods were involved. The court relied on legal provisions and interpretations from previous judgments to support its decision.
Fact of the Case:
The appellant-assessee was involved in supplying capital goods and was accused of issuing invoices without supplying any goods, violating the Central Excise Rules, 2002. The Settlement Commission rejected the appellant's application and granted immunity to another party involved. The appellant contested the show cause notice and subsequent proceedings, leading to the imposition of a penalty.
Finding of the Court:
The court found that the penalty under Rule 25 of the Rules could be imposed even when no goods were involved, based on previous judgments and legal provisions. The court also upheld the quantum of penalty imposed by the Tribunal.
Issues: The issues involved included the sustainability of the penalty under Rule 25 of the Central Excise Rules, 2002 in the absence of goods, and the applicability of the Settlement Commission's order to the appellant.
Ratio Decidendi: The court's decision was based on the interpretation of legal provisions and previous judgments, supporting the imposition of penalty under Rule 25 even in cases where no goods were involved.
Final Decision: The appeal was dismissed as the court found no substantial question of law arising from the findings recorded by the Tribunal.
AJAY KUMAR MITTAL, J.
1. This order shall dispose of CEA Nos. 98 of 2014 and 01 of 2015 as according to the learned counsel for the parties, the issue involved in both the appeals is identical. However, the facts are being extracted from the CEA No.98 of 2014.
2. CEA No. 98 of 2014 has been preferred by the appellant-assessee under Section 35G of the Central Excise Act, 1944 (in short, “the CEA Act”) seeking quashing of final Order dated 20.08.2014, Annexure A.1, passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (in short, “the Tribunal”) in Appeal No. E/476/2012, claiming following substantial questions of law:-
(i) “Whether Order passed by the learned Tribunal is sustainable when the Settlement Commission had settled the case of main notice?
(ii) Whether penalty under Rule 25 of the Central Excise Rules, 2002 is sustainable in case goods are not held liable to confiscation as there were no goods?
(iii) Whether maximum penalty is sustainable in case minimum penalty is not prescribed?
(iv) Whether the impugned order is perverse and contrary to record?
(v) Whether grave and palpable injustice would be caused to the Appellant if the respondents are permitted to execute the order?
3. A few facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. The appellant-assessee is engaged in supply of capital goods. On 24.11.2006, the Directorate General of Central Excise Intelligence (DGCEI) on the basis of intelligence visited the premises of M/s TACL and summoned records for scrutiny. On the basis of the investigation, the DGCEI opined that the assessee supplied cenvatable invoices to M/s TACL without supplying capital goods and violated the provisions of Central Excise Rules, 2002 (in short, “the Rules”). The DGCEI vide show cause notice dated 5.3.2008 called upon the assessee to show cause as to why penalty under Rule 25 of the Rules should not be imposed. The assessee apart from M/s TACL filed an application under Section 32 of the Act before the Settlement Commission, New Delhi to settle the matter. The Settlement Commission rejected the application filed by the assesssee and accepted the one filed by M/s TACL. M/s TACL deposited the duty and interest of Rs.26,04,960/- and Rs.7,11,304/-. The Settlement Commission granted immunity to M/s TACL from prosecution and imposed penalty of Rs.75,000/- vide order dated 1.10.2008, Annexure A.2. After rejection of the application by the Settlement Commission, the assessee contested the show cause notice and filed reply dated 17.03.2009. After considering the matter, the authority did not impose penalty under Rule 25 of the Rules, vide order dated 05.06.2009, Annexure A.3. Aggrieved by the order, the revenue filed an appeal before the Appellate Authority. Vide order dated 26.05.2010, Annexure A.4, the Appellate Authority modified the order and allowed the appeal filed by the respondent. Thereafter de novo adjudicating proceedings were initiated by the adjudicating authority. Vide order dated 27.08.2010, the assessee informed the authority that it had filed an appeal before the Tribunal against the order dated 26.05.2010 and requested to keep the matter pending till the disposal of the appeal. The adjudicating authority did not consider the submissions of the assessee and completed the proceedings vide order dated 29.12.2010, Annexure A.5, penalty of Rs.1,62,400/- under Rule 25 of the Rules was imposed on the assessee. Feeling aggrieved, the assessee filed an appeal before the Appellate Authority. Vide order dated 14.11.2011, Annexure A.6, the order dated 29.12.2010 was upheld. The assessee filed second appeal along with stay application before the Tribunal. Vide order dated 20.08.2014, Annexure A.1, the Tribunal dismissed the appeal. Hence the instant appeal by the appellant-assessee.
4. We have heard learned counsel for the parties.
5. A perusal of the order passed by the Tribunal shows that it was conceded by the assessee
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