This application has been filed by M/s.Arun Vyapar Udyog Pvt. Ltd. for waiver of predeposit and stay of recovery of the duty and penalty amounts as per the impugned order. In the impugned order, the Commissioner (Appeals) affirmed demand of duty of Rs.3,80,560/- under Section 11A of the Act, interest due thereon under Section 11AB and reduced the penalty imposed by the original authority under Section 11AC to Rs.90,000/-. After hearing both parties on the stay application, the application is dismissed and the appeal itself is taken up for final disposal.

2. The facts of the case are that M/s. Arun Vyapar Udyog Pvt. Ltd. removes iron and steel re-rolling products manufactured by them through their consignment agents. As per Section 4 of the Act, when goods are removed through consignment agents, duty is liable to be paid on the value at which the goods are cleared on sale by the consignment agents. The assessee used to pay duty on the goods on a notional price at the time of their clearance from the factory and used to make good the short payment in duty, after the goods are ultimately removed on sale by the consignment agent. However, the assessee stopped the practice of so paying the differential duty due on knowing actual price for sale from the place of removal and did not pay the differential duty due for clearances made during 2001-02 and 2002-03. Following the visit of the preventive team, the short payment by the assessee was detected and proceedings were initiated by issuing a show-cause notice. After following due process of law, short levy of Rs.3,80,560/- was demanded with the interest due thereon. Penalty of equal amount as the duty demanded was imposed on the assessee under Section 11AC. A penalty of Rs.10,000/- was also imposed on the assessee under Rule 25 of the Central Excise Rules, 2002. On the appeal filed before the Commissioner, the Commissioner (Appeals) upheld the demand of duty and interest but vacated the penalty imposed under Rule 25 of the Central Excise Rules and reduced penalty under Section 11AC from Rs.3,80,560/- to Rs.90,000/. In reducing the penal liability of the assessee, the Commissioner had taken into account the fact that the assessee had paid the duty demanded before the issue of show-cause notice.

3. In the appeal before the Tribunal, the assessee has taken the argument that the appellant had no intention to evade payment of duty; the marketing pattern of the assessee was known to the department and that appellants had been filing ER-1 returns regularly complete with all relevant details. Citing various case law, it is argued by the counsel for the appellants that extended period could be invoked only if there was conscious withholding of information by the assessee. Non-declaration of any information was not sufficient to invoke larger period. The show-cause notice was issued after about two years of completing the investigation. Therefore, the demand was hit by limitation. It was a settled position that penalty under Section 11AC as well as interest liability under Section 11AB could not be fastened on the assessee, if the assessee had paid the duty due before issue of show-cause notice. This was the ratio of the decision of the Tribunal in Commissioner of Central Excise, Delhi Vs Machino Montell (I) Ltd. reported in 2004 (168) E.L.T. 466 (Tri.-LB) and Rashtriya Ispat Nigam Ltd. Vs Commissioner of Central Excise, Visakhapatnam reported in 2003 (161) E.L.T. 288 (Tri.-Bang.). The second decision was upheld by the Honble Supreme Court and reported as 2004 (163) E.L.T. A.53 (S.C.). The learned counsel cited the decision of the Tribunal in JCT Ltd. Vs. Commissioner of Central Excise reported in 2005 (185) E.L.T. 305 (Tri.-Del.) as squarely applicable to the instant case. In the said decision, the Tribunal had decided that imposition of penalty was not warranted when short payment had occurred due to fluctuation in prices prevailing at depots and there was no intention to evade duty.

4. The learned SDR reiterated the findings contained in the impugned order and cited the decision of the Tribunal in Commissioner of Central Excise, Delhi-IV Vs ILPEA Paramount Pvt. Ltd. reported in 2007 (213) E.L.T. 500 (Tri.-LB). He submitted that in the above decision of the Tribunal, the Tribunal had followed the remand directions contained in the judgement of the Honble Punjab and Haryana High Court in the case of CCE, Delhi Vs. Machino Montell (I) Ltd. reported in 2006 (202) ELT 398 (P&H) to the effect that if penalty was held to be warranted under Section 11AC, the Tribunal was bound to levy penalty equal to the amount of duty. The Honble High Court had also found that the language of Section 11AC clearly left no room for discretion in the quantum of penalty to be imposed.

5. I have carefully considered the case records and submissions made by both sides. From the facts of the case, it is clear that during the material period, the assessee had not discharged the full duty due on the goods cleared by it. It was aware of its liability since earlier it used to periodically discharge the short levy ascertained on ultimate sale of the goods by its consignment agents. Therefore, it is obvious that the appellant had deliberately evaded paying the legitimate duty due to the exchequer. The argument that the department was aware of its marketing pattern and the assessee had regularly filed the ER-1 returns do not mitigate the assessees culpability in evading the tax due. The department was aware of its practice of paying the short levy subsequent to removal of the goods by the consignment agent. The invoices issued by it or the ER-1s submitted by it do not indicate if the duty was paid on the correct transaction value or notional value. This was only known to the assessee and the assessee was aware of its actual liability. In the circumstances, the impugned order which affirmed the duty and interest and lesser penalty than the duty demand cannot be said to have been contrary to the legal provisions.

6. In the Rashtriya Ispat Nigam case cited by the appellant, the issue involved disputed duty liability on intermediate goods consumed in the factory of a major Public Sector Unit. It was not a case where the assessee had evaded payment of duty due to the Government wilfully and attracted the harsh penal consequences provided under Section 11AC of the Central Excise Act. In the judgement of the Honble High Court of Karnataka in Commissioner of Central Excise, Mangalore Vs Shree Krishna Pipe Industries reported in 2004 (165) ELT 508 (Kar.) the Honble Court had found that there was no question of any fraud, misrepresentation or suppression of facts in that case. The Honble High Court relied on the ratio of the Tribunals decision in Rashtriya Ispat Nigam Ltd case, affirmed by the Supreme Court. I find that the Rashtriya Ispat Nigam case did not involve fraudulent attempt to evade payment of duty.

7. In the recent decision of the Tribunal in Commissioner of Central Excise, Delhi IV Vs. ILPEA Paramount Pvt. Ltd. (supra), the Tribunal found that penalty equal to duty was to be imposed mandatorily in view of the identical wordings of section 11a proviso and section 11ac. The Tribunal had followed the judgement of the Honble High Court of Punjab and Haryana which had decided that equal amount of penalty had to be imposed where demand was for an amount short levied by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Central Excise Act or Rules. In view of the ratio of the said judgement of the High Court and the decision of the Larger Bench of the Tribunal, the challenge of the appellant to the penalty imposed on it cannot be sustained. The duty demanded is above Rs.3.8 lakhs, whereas the penalty imposed under Section 11AC is only Rs.90,000/-. The Revenue has not challenged this penalty as not being equal to the duty evaded. However, the law provides for recovering 25% of the evaded duty as penalty if demand is honoured within 30 days of the order. In this case the assessee paid the duty due before the issue of Show Cause Notice.

8. As regards the interest demanded, I find that Section 11AB provides for recovery of interest for delay in paying any duty due by the assessee. The decisions cited by the assessee relate to transactions prior to 11.5.2001, when sub-sections 2a to 2c of section 11a were enacted to require the assessee to pay also the interest when the assessee made good short levied amount on its own ascertainment. The following observations of the High Court of Mumbai in CCE Vs. M/s. Padmashri V.V. Patil Sahakari Sakhar Karkhana Ltd. reported in 2007-TIOL-419-HC-MUM-CX clarify the legal position and vindicate the impugned penalty and demand of interest: 7. Considering the scheme together, it is evident that interest chargeable u/s 11AB is a sort of civil liability of the assessee, who has failed to pay the duty or who has short paid the duty. This is irrespective of the fact whether such non payment / short payment is innocent or mala fide. So far as penalty u/s 11AC is concerned, it is certainly a provision, penal in nature. This is because, it comes into play only when non payment / short payment is result of fraud, collusion or any willful mis-statement/suppression of facts or contravention of any of the provisions of the Act / Rules on the part of the assessee, with intent to evade payment of duty. There is a sense of deliberate evasion and scheming for the purpose on the part of the assessee and that is why in that case, there is no discretion to impose penalty lesser than 100% or 25% in case duty determined is paid within 30 days from the date of determination. The distinction of civil liability and criminal liability stands further demonstrated by Explanation (1) to sub-section (2b) of section 11a, which reads thus: "Explanation (1): Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or was short levied or was short paid or was erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made there under with intent to evade payment of duty."

8. The ratio laid down in the matter of Rashtriya Ispat Nigam Ltd. V/s Commissioner of Central Excise, Visakhapatnam - 2003 (161) E.L.T., 285 (Tri. - Bang.), relied upon by learned counsel for assessee, which view was confirmed by the Honble the Apex Court while dismissing the appeal of the department, that in case the duty is paid before issuance of show cause notice, no penalty u/s 11AC is imposable, was a decision of the Tribunal at Bangalore dated 13.11.2002. Taking into consideration the hierarchy of authorities under the Central Excise Act, 1944 i.e. Assessment Officer conducting enquiry and determining the duty evaded or short paid, Commissioner (Appeals) and thereafter CESTAT, it can safely be said that this was a decision regarding the non payment of duty of the period prior to insertions by Amendment Act No.14/2001 with effect from 11.5.2001 by which sub-sections (2A), (2B) and (2C) are inserted in the main Act. Naturally, the Explanation (1) to sub-section (2B), reproduced hereinabove, was neither on the statute book nor was under consideration before the Tribunal or before the Honble the Supreme Court.

9. In the circumstances, I do not find any reason to interfere with the impugned order and accordingly, dismiss the appeal filed by M/s. Arun Vyapar Udyog Pvt. Ltd. (Pronounced in open court on ) (P. KARTHIKEYAN) MEMBER (T) ksr 24-09-2007