CA Urvashi Porwal
Brief of the Case
In the case CCE V/s Nazareth Alloys (High Court of Bombay at Goa), it has been held that by following the judgement of the Hon’ble Apex Court in the case of ‘Dharmendra Textile Processors’ in case provisions of law provides for mandatory penalty, then revenue need not establish mens rea.
The only point for consideration was whether the reliance placed by the CESTAT in the judgment of the Larger Bench The in the case of Bhillai Conductors Pvt. Ltd. V/s. CCE, Raipur – 2000 (125) ELT 781 (Tribunal) was justified in the facts and the circumstances of the case.
The appellant pointed out that the observations that the said judgment no longer survived in view of the judgment passed by the Division Bench of this Court in the case reported in 2009 BCI 63 in the case of “Commissioner of Central Excise & Customs Vs. Ram Aluminium P. Ltd.”. They further rely on the judgment of the Hon’ble Apex Court reported in 2008 (231) E.L.T. 3 (S.C.) in the case of “Union of India Vs. Dharamendra Textile Processors”, in case provisions of law provides for mandatory penalty, then revenue need not to establish mens rea.
Held By Hon’ble High Court of Bombay at Goa
The Hon’ble High Court found that in the impugned order passed by the Appellate Tribunal the main ground on which the confiscation was disallowed was because the appellants have failed to establish mens rea, which would entitle them to confiscate the goods. But, however, in the judgment of the Hon’ble Apex Court in the case of “Dharmendra Textile Processors” (supra), it has been observed that
“The stand of learned counsel for the assessee is that the absence of specific reference to mens rea is a case of casus omissus. If the contention of learned counsel for the assessee is accepted that the use of the expression “assessee shall be liable” proves the existence of discretion, it would lead to a very absurd result. In fact in the same provision there is an expression used i.e. “liability to pay duty”. It can by no stretch of imagination be said that the adjudicating authority has even discretion to levy duty less than what is legally and statutorily leviable. Most of cases relied upon by learned counsel for the assessee had their foundation on Bharat Heavy Electrical’s case (supra). As noted above, the same is based on concession and in any event did not indicate the correct position in law.
In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In Para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given.”
In view of the said observations of the Hon’ble Apex Court, the ground on which the order was passed by CESTAT would not prima facie survive. As the respondents have failed to remain present and as the Tribunal has disposed of the appeal, only relying on the case of “Bhillai Conductors Pvt. Ltd.” (Supra), the Hon’ble Court found it appropriate in the interest of justice to quash and set aside the order passed by the CESTAT and to direct the CESTAT to decide the appeal afresh after hearing the parties in accordance with law. All the contentions of the parties are left open. The substantial questions of law are answered accordingly.