The Commissioner, Central GST And Cx vs. M/S Devyani Processors PVT. LTD.

Held

The Court held that the condition precedent for invoking Section 11AC of the Central Excise Act, 1944, is the existence of fraud, collusion, mis-statement, suppression of facts, or contravention of the Act or rules with intent to evade duty. The adjudicating authority had made a categorical finding that there was no fraud, collusion, mis-statement, or suppression of facts with intent to evade duty. The lapse in not producing re-warehousing certificates was condoned/regularised by post-facto permission to dispose of the goods. Since the condition precedent for invoking Section 11AC was not satisfied, the Tribunal's order upholding the adjudicating authority's decision, which did not impose penalty under Section 11AC, was not legally infirm. The appeal was summarily dismissed as it did not raise any substantial question of law.

Facts

The Commissioner of Central GST and CX (appellant) challenged an order of the Customs, Excise and Service Tax Appellate Tribunal (Tribunal). The respondent, M/s Devyani Processors Pvt. Ltd., a 100% EOU, cleared goods under ARE-3 against a CT-3 certificate to another EOU. Due to order cancellation, the goods were diverted to the domestic tariff area with permission. A demand of Rs. 2,44,36,542/- was raised, confirmed by the adjudicating authority, and a penalty of Rs. 60,00,000/- was imposed under Rule 25 of the Central Excise Rules, 2002. The respondent appealed to the Tribunal seeking imposition of penalty under Section 11AC of the Central Excise Act, 1944, but the Tribunal upheld the adjudicating authority's order and dismissed the appeal.

Key Issues

1. Whether the learned Commissioner was right in not imposing penalty under Section 11AC of the Central Excise Act, 1944, despite holding the respondent liable under Section 11A of the Act? 2. Whether the Appellate Tribunal erred in not assigning cogent and independent reasons while upholding the order of the learned Commissioner, thereby breaching the principle of natural justice? Contentions of the Appellant (Commissioner): The Tribunal erred in holding that the mandatory penalty under Section 11AC was not imposable. The respondent failed to produce warehousing certificates within ninety days and did not intimate the department about the diversion of goods. This constituted suppression of material facts, justifying the imposition of penalty under Section 11AC. The adjudicating authority was not justified in not imposing the penalty, and the Tribunal was not justified in upholding that order. Contentions of the Respondent: The judgment records no specific arguments for the respondent.