Marcandy Prasad Radhakrishna Prasad Pvt. Ltd v. C.c.e

P.C. Jain, Member (T)

1. Briefly stated, facts of the case are as follows : 1.1 Central Excise Officers, acting on an information, on the basis of scrutiny of private records seized from the appellants premises on 17-4-1996, found that 499.019 M.Ts. of twisted M.S. rods were manufactured and removed clandestinely without payment of duty. Duty evaded during the period February 1995 to April 1996, was alleged at Rs. 7,93,444.00. The appellants accepted their duty liability and deposited the aforesaid amount in various sums during the period 19-8-1996 to 26-4-1997.

1.2 Further, the appellants in their letter dated 29-4-1997, accepting the aforesaid liability and on understanding that the case of evasion of duty is under investigation, addressed to the Deputy Director General (Anti Evasion) Calcutta have stated as follows :-

"This payment is made without reserving any right to contest the case in its merits in any other forum of law."

1.3 A show cause notice dated 9-6-1997 was issued to the appellant proposing imposition of penalty under Section 11 AC of the Central Excise Act, 1944 and recovery of interest on duty evaded.

2.1 The appellants, in their reply to show cause notice, had urged that during the period of commission of offence i.e. February 1995 to April 1996, Sub-section 11AB (for recovery of interest) and 11AC (for mandatory imposition of penalty equivalent to 100% of duty evaded) were not in existence. The said provisions could not, therefore, be invoked. They also stated that the private books, on which the clandestine manufacture and removal has been based, were of the previous management. The present management is not at all responsible for the illegal activities of the previous management.

3.1 The adjudicating authority, however, did not accept the aforesaid pleas holding that when the show cause notice was issued, the said provisions had already come into force on 20-9-1996. Hence, he has imposed the penalty of Rs. 7,93,444.00 under Section 11AC. He has also ordered for recovery of the interest on duty evaded.

Hence this appeal before the Tribunal.

4.1 Ld. Consultant, Shri B.N. Chattopadhyay has submitted that the provisions of Section 11 AC are not applicable to offences committed prior to the coming into force of the said section. This has been held so by the Tribunal in the case of Laxmi Packaging (P) Ltd. v. Collector of Central Excise 1998 (98) E.L.T. 91. He further submits that the letter dated 29-4-1997, written by the appellants, clearly shows that the investigating officers got this letter written with an assurance that no further action would be taken, if the duty involved was paid. On this assurance, appellants have paid the duty but the Revenue has not fulfilled its part of assurance. Had that not been the position, no assessee would have surrendered its right to contest the case on merits. He therefore, prays for setting aside the penalty and recovery of interest

4.2 He also submits that allegation of discrepancy between private and statutory records is on the basis of estimate of 10 kgs per rod. The very allegation becomes doubtful and Revenues case for duty is also suspect from that angle.

5.1 I have carefully considered the pleas advanced from both sides. I agree with the appellants ld. Consultant that Section 11AC and Section 11AB cannot be applied retrospectively, because the provisions contained therein are of substantive character not just procedural. Further, Section 11AB(2) make it clear specifically that recovery of interest would not be applicable to duty evaded during the period prior to coming into force of the said Section.

5.2 Consequently, penalty of Rs. 7,93,444.00 imposed under Section 11AC and recovery of interest under Section 11AB, under the impugned order are set aside.

5.3 Question would, however, remain whether the appellants would be liable to penalty under Rule 173Q. The adjudicating authority has not at all discussed the pleas regarding the previous management and the present management is not at all concerned. In the absence of any finding by the adjudicating authority, no case for penalty is made out under Rule 173Q read with any other rule of the Central Excise Rules.

5.4 Ld. Consultants plea to the effect that the letter dated 29-4-1997 surrendering the right of the appellant to contest the case is of no legal effect is correct because no statutory right of an assessee can be taken away by such a letter.

5.5 Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellant.

5.6 Since the appeal itself has been disposed of, stay petition also gets disposed of.