whether penalty and interest can be levied and collected when the duty has been paid before the issue of Show Cause Notice under the provisions of the Central Excise Act, 1944 (`the Act’ for short).

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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2012
(@ DY.NO.11065 OF 2006)

 
COMMNR.OF CENTRAL EXCISE, KOLKATA … APPELLANT

VERSUS

M/S.PLAXAIR INDIA PVT. LTD. … RESPONDENT

 

O R D E R

 

1. Delay condoned.

 

2. Learned counsel for the sole respondent appears and

takes notice. Hence notice waived.

 

3. Appeal admitted.

 

4. The issue raised in this appeal lies in a very narrow

compass. Therefore, by consent of the learned counsel

for the parties to the lis, the matter is taken up for

final hearing.

 

5. The issue in this appeal is, whether penalty and

interest can be levied and collected when the duty has

been paid before the issue of Show Cause Notice under the

provisions of the Central Excise Act, 1944 (`the Act’ for

short).
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6. In the present case, it is the stand of the assessee

that the assessee had paid the duty under the provisions

of the Act before the issue of the Show Cause Notice and,

therefore, not liable for the payment of penalty and

interest on the duty so paid under Section 11 AC of the

Act.

 

7. The Tribunal, accepting the stand of the assessee and

by relying on the observations made by this Court in the

case of Rashtriya Ispat Nigam Ltd. Vs. CCE.,

Visakhapatnam, 2004 (163) ELT A 53 (SC), has allowed the

assessee’s appeal and has set aside the demands

raised by the Revenue for payment of penalty and

interest. The Revenue, being aggrieved by the orders

passed by the Tribunal, is before us in this appeal.

 

8. Mr. R.P. Bhatt, learned counsel appearing for the

Revenue, would submit that the issue raised in this

appeal is now squarely covered by the decision of this

Court in Union of India Vs. Dharmendra Textile Processors

& Ors., (2008) 13 SCC p.369 and, therefore, submits that

the judgment and orders passed by the Tribunal requires

to be annulled by this Court. Per contra, learned counsel

appearing for the assessee would submit that though the

issue is now covered by the decision of this Court in the

case of Dharmendra Textile Processors (supra), the matter
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requires to be remitted to the Tribunal for fresh

consideration and decision. In this connection, the

learned counsel invites our attention to para 20 of the

judgment in Dharmendra Textile Processors (supra).

 

9. This Court, in the aforesaid cited decision after

considering the effect of Section 11 AC of the Act, has

come to the conclusion that the view expressed in Dilip

N. Shroff Vs. C.I.T., (2007)6 SCC 329 is not correctly

decided and accordingly has accepted the view taken in

S.E.B.I. Vs. Cabot International Capitals Corporation,

(2006) 5 SCC 361. After doing so, the three Judge Bench

of this Court thought it fit to set aside the orders

passed by the High Court and the Tribunal and remitted

the matter to the High Court/Tribunal, as the case may

be, for fresh adjudication in the light of the decision

of this Court in Dharmendra Textile Processors case

(supra).

 
10. In view of the above, we are left with no other

alternative but to set aside the orders passed by the

Tribunal in Appeal No.E/711/03 dated 16.8.2005 and remit

the matter to the Tribunal for its fresh consideration

and decision. We also make it clear that the Tribunal

now will decide the issue afresh, keeping in view the

observations made by this Court in Dharmendra Textile
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Processors case (supra).

 
11. With these observations and directions, the appeal

is disposed of. No costs.

 

 

……………….J.
(H.L. DATTU)

 

 

……………….J.
(ANIL R. DAVE)

NEW DELHI;
FEBRUARY 22, 2012