IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE V.GIRI TUESDAY, THE 20TH JANUARY 2009 / 30TH POUSHA 1930 WA.No. 2346 of 2008() --------------------- {IN OP.20283/2002 OF THIS COURT} .................... APPELLANT(S): RESPONDENTS: ---------------------------------------------------- 1. THE SUPERINTENDENT OF CENTRAL EXCISE, OFFICE OF THE SUPERINTENDENT OF CENTRAL EXCISE, ETTUMANOOR RANGE, ETTUMANOOR. 2. THE DEPUTY COMMISSIONER OF CENTRAL EXCISE, KOTTAYAM DIVISION, CMS COLLEGE ROAD, KOTTAYAM-1. 3. THE COMMISSIONER OF CUSTOMS & CENTRAL EXCISE (APPEALS), C R BUILDING, I S PRESS ROAD, COCHIN-18. BY ADV. SRI.JOHN VARGHESE, SC, CEN.BOARD OF EXCISE RESPONDENT(S): PETITIONER: --------------------------------------------------- SANCE PHARMACEUTICALS, P.B.NO.49, ETTUMANOOR, KOTTAYAM 686 631, REPRESENTED BY ITS PARTNER SRI.MANOJ JOSEPH. ADV. SRI.V.M.KURIAN SRI.K.T.THOMAS THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 20/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B. KOSHY, Ag.C.J. & V.GIRI, J. ------------------------- W.A.No.No.2346 of 2008 ------------------------- Dated this the 20th day of January, 2009. JUDGMENT GIRI, J. The respondents in O.P.No.20382/02, which was allowed by the learned single Judge, as per the impugned judgment, have come up in appeal. The writ petitioner, manufacturer of pharmaceutical products, had availed of a facility of monthly payment of excise duty, under Rule 173(GG) of the Central Excise Rules as it stood prior to 1.4.2000. It had claimed the benefit of concessional rate of excise duty in terms of notification No.9/99 dated 28.2.1999. The concessional rate of duty is 4.8% for clearances up to Rs.50 lakhs in any financial year. Monthly returns were also being submitted by the petitioner. It seems that concessional duty was availed in respect of goods worth Rs.2,69,847/-., in excess of the limit. This resulted in a short payment of Rs.4,318/- by way of excise duty, paid by the petitioner for the month of October, 1999. The petitioner, on realising that there is a short W.A.NO.2346/08 :: 2 :: payment of duty, remitted the same on 1.3.2000 and remitted a further amount of Rs.451/- by way of interest on 15.3.2000. Thereafter, Ext.P1 show cause notice was issued on 13.4.2000 requiring the petitioner to show cause why the differential excise duty should not be levied with interest at the rate of 30% in terms of Rule 173(GG)(3) of the Rules and penalty should not be imposed at the rate of Rs.500/- per day from the date on which the amount was payable till the actual date of payment. Ext.P4 reply was submitted by the petitioner pointing at the total absence of any mens rea or intention to evade payment of duty. It was further pointed out that what had happened was a clerical mistake in computing the duty payable and on realising the same, the differential amount of Rs.4,318/- plus interest thereon had actually been paid. The petitioner, therefore, prayed for dropping of the proceedings under Rule 173(GG) of the Rules. This was not done. Penalty at the rate of Rs.500/- per day was imposed as per Ext.P3 order, which was affirmed by the appellate authority under Ext.P5. Hence this writ petition. W.A.NO.2346/08 :: 3 :: 2. The learned single Judge took note of the fact that the appellate authority found that voluntary payment made by the assessee before the issuance of the show cause notice revealed absence of any intention on the part of the assessee to evade payment of duty. The appellate authority, nevertheless affirmed the imposition of penalty on the ground that Rule 173(GG) mandatorily provided for imposition of penalty, even in the absence of a wilful intention to evade payment of duty. This, the learned single Judge found, was not resultant upon a correct application of the legal principles laid down by the Supreme Court in several decisions, dealing with the imposition of penalty under fiscal statutes. The learned single Judge found that it cannot be said, as a matter of law, that penalty should always be imposed even when the materials on record suggest absence of any wilful intention to evade payment of duty or tax, as the case may be. Accordingly, Exts.P3 and P4 were quashed. 3. We heard learned counsel for the parties. We have gone through the detailed judgment of the learned single Judge. In our W.A.NO.2346/08 :: 4 :: view, the learned Judge has correctly applied the law laid down by the Supreme Court that penalty should not be imposed, in the absence of a wilful intention to evade payment of tax or duty, as the case may be. It is trite law that even when the statute provides for imposition of penalty when there is failure to pay duty within the statutorily prescribed period, such imposition of penalty should be preceded by a finding that there was a wilful default as such. In the present case, the deficit duty had been paid along with interest even before the issuance of the show cause notice. The appellate authority had also found absence of any intention to evade payment of duty. In these circumstances, we are in complete agreement with the reasoning and findings of the learned single Judge. The orders of penalty were clearly not sustainable and rightly interfered with by the learned single Judge. 4. Learned counsel for the appellants contended that Ext.P4 order was appealable under the statute and the learned Judge should have refrained from interfering with the same. We find that the writ petition was filed as early as in W.A.NO.2346/08 :: 5 :: the year 2002. It was entertained and the learned Judge had considered the same on merits. A reading of the judgment does not suggest any such contention having been taken up before the learned Judge. We do not think it is appropriate to permit the appellants to raise that contention at this stage. For all the reasons mentioned above, we find no grounds to interfere with the judgment of the learned single Judge. The appeal is bereft of merit and hence dismissed. Sd/- (J.B. KOSHY) ACTING CHIEF JUSTICE Sd/- (V.GIRI) JUDGE sk/ //true copy// P.S. to Judge