No Penalty when no clandestine removal of goods: SC
November, 22nd 2006
A recent ruling of Supreme Court has come as a mega relief for manufacturers who were slapped with Penalty by Excise Authorities in cases which did not fall in the category of clandestine removal.
Setting aside the Penalty of One Crore imposed on manufacturer ; the Apex Court has ruled that when there is not even an allegation much less finding by the department that there has been any clandestine removal of goods without assessment- the penalty is liable to be set aside.
The proposed penalty was under Rule 9(2) and 52-A of Central Excise Rules.
SC referred to the ruling in case of N.B. Sanjana Vs. Elphinstone Spg. & Wvg. Mills Co. Ltd., wherein it was held as under:
".....To attract sub-rule (2) of Rule 9, the goods should have been removed in contravention of sub-rule (1).It is not the case of the appellants that the respondents have not complied with the provisions of sub-rule (1). We are of the opinion that in order to attract sub-rule (2), the goods should have been removed clandestinely and without assessment.In this case there is no such clandestine removal without assessment.On the other hand, goods had been removed with the express permission of the Excise authorities and after order of assessment was made.No doubt the duty payable under the assessment order was nil.That, in our opinion, will not bring the case under sub-rule (2). " SC observed that in the present case there is not even an allegation much less finding by the department that there has been any clandestine removal of goods without assessment.As such the penalty is liable to be set aside.The matter having been settled in the Kar Vivad Samadan Scheme, 1998 the question of determination of the duty payable or levy of penalty did not arise.In our view, the Tribunal clearly erred in upholding the levy of penalty.
The Appeal filed by the assessee was accepted and the penalty levied was ordered to be deleted.
Revenue also filed Appeal against the deletion of duty demand of Rs. 17,67,13,315/- raised in the show-cause notice . Dismissing the Appeal of Revenue; SC ruled that after the grant of certificate under the Kar Vivad Samadan Scheme, 1998 as having settled the dispute and payment of the amount determined no further proceedings could be initiated or proceeded with for the period in question.