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Commissioner of Central Excise Commissio v. M/S Indian Oil Corporation Ltd., Panipat - CEA-131-2006  RD-P&H 10424 (13 November 2006)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
C.E.A.No. 131 of 2006
Date of decision:16.11.2006
Commissioner of Central Excise Commissionerate, Delhi -V ...Appellant
M/S Indian Oil Corporation Ltd., Panipat ...Respondent
CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR.JUSTICE RAJESH BINDAL
Present: Mrs.Daya Chaudhary, Assistant Solicitor General of India for the appellant.
This appeal has been preferred under Section 35(G) of the Central Excise Act, 1944 against the order dated 24.2.2006 passed by Customs, Excise & Service Tax Appellate Tribunal, New Delhi proposing following substantial question of law:- "Whether the penalty under Section 11AC of Central Excise Act, 1944 is mandatory and equal to the duty demanded or the authority has discretion to impose lessor penalty?"
Facts noticed by the Tribunal are that the assessee was consuming captively heavy petroleum stock/low sulphur heavy stock/ residual fuel oil manufactured by them without payment of duty for the purpose of generating the electricity to be used and consumed by their manufacturing unit for manufacturing their final excisable products under notification No.67/95-EC.
The Department issued a show cause notice to the ***
assessee proposing to deny the benefit of above notification on the ground that fuel were being used in generation of electricity, which was being consumed in the residential colony of the assessee as well in addition to being used in the manufacturing of final product, which was a condition for grant of exemption from duty. After adjudication demand of duty was confirmed and penalty was also imposed against which the appeal of the appellant was dismissed by the first Appellate Authority. The Tribunal upheld the imposition of duty following the judgment in case of the assessee i.e. Indian Oil Corporation Vs. CCE, 2002 (148) ELT 1021. The Tribunal, however, reduced the penalty after recording a finding that in the facts and circumstances of the case maximum penalty was not called far. No finding had been recorded by the Tribunal on the question raised on behalf of the appellant that there was intention to evade the payment of duty.
Learned counsel for the Revenue submitted that penalty under Section 11AC of the Central Excise Act, 1944 is mandatory and penalty equal to the amount of duty is required to be imposed and authority has no discretion to impose less penalty. Even though the above contention had been upheld in a judgment of this court in Commissioner of Central Excise, Delhi-IV, New Delhi Vs. M/S Illpea Paramount Pvt. Ltd., CEA No.56 of 2006 decided on 21.7.2006 and held that in case where finding had been recorded that the assessee had not paid the duty with intention to evade the payment of duty but in the present case, the Tribunal has not recorded such a finding.
The assessee is a public sector undertaking and in view of the judgments of Hon'ble Supreme Court in Oil and Natural Gas Commission Vs. Collector of Central Excise 1992 Supp.(2) SCC 432 (ONGC-I), Oil and Natural Gas Commission Vs.Collector of Central Exicse 1995 Supp.(4) SCC 541 (ONGC-II) and Oil and Natural Gas Commission Vs.Collector of Central Exicse 2004(6) SCC 437 (ONGC-III), we would have referred the appellant to a Committee of Secretaries or would have remanded the matter to the Tribunal but having regard to the fact that no finding had been recorded by the ***
Tribunal that assessee had intention to evade the payment of duty; the Tribunal has merely reduced the amount of penalty; and substantial question of law has already been decided in Illpea Paramount Pvt.
Ltd's case supra, we do not find any substance in the appeal and the same is dismissed.
(Adarsh Kumar Goel)
November 16,2006 (Rajesh Bindal)
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