- (1.) The present appeal has been filed by the Commissioner of Central Excise Commissionerate, Rohtak under Section 35G of the Central Excise Act, 1944 against the order dated 28-3- 2006 (Annexure P-2) passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi in Appeal No.E/2032 of 2004 by proposing the following substantial questions of law : - " Whether the penalty under Section 11AC of Central Excise Act, 1944 read with Rule 173Q of erstwhile Central Excise Rules, 1944 is mandatory and equal to the duty demanded or the authority has discretion to impose lesser penalty?"
(2.) The brief facts of the case are that M/s Aravali India Ltd., formerly known as Aravali Pipes Ltd., 5 Km. Stone, Hissar Road, Hansi (hereinafter referred to as the party' or M/s. AIL') are engaged in the manufacture of PVC Pipes falling under chapter heading No. 39 of the CETA, 1985 and are also availing Modvat credit on the inputs used in the manufacture of final products.
(3.) On 9-1-1999 based on intelligence the Central Excise Officers of Hqrs. Anti-Evasion Branch, Gurgaon visited the factory of M/s. Aravali India Ltd. for surprise preventive checks. The investigation made by the Department crystallized into the show cause notice dated 10-5-2001 issued to the company including the respondent for wrongful availing of Modvat credit to the tune of Rs. 86,87,465/-.The case against M/s. Aravali India Ltd. was that they have received PVC resin invoices which contained false description of transporting vehicles, which on inquiry was found to be Scooter, Motorcycle, tractor, car, tanker etc, which were not capable of carrying them in bulk quantity. Thus the allegation therefore, was that the goods were not really carried to the premises of respondent from the premises of the consignee/stockists for M/s. I.P.C.L., Baroda. Thus it was alleged that M/s. Aravali India Ltd. in connivance with the consignment stockists were causing heavy loss to the exchequer. The adjudicating authority vide its order dated 9-2-2004 ordered as under :- "(i I order recovery of modvat credit of Rs. 86,87,465/- from M/s. AIL, Hansi under Rule 57-I of erstwhile Central Excise Rules, 1944 read with proviso to Section 11A(1) of Central Excise Act, 1944 by invoking extended period of five years; (ii I order recovery of interest at the appropriate rate on wrongly availed modvat credit or Rs. 86,87,465/- from the party under Section 11AB of Central Excise Act, 1944 ; (ii I impose a penalty of Rs. 86,87,465/- equal to the modvat credit availed fraudulently on M/s. Aravali India Ltd., Hansi under Rule 173Q of erstwhile Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944; (iv I impose a penalty of Rs. 86,87,465/- on M/s. S.K. & Co. Pvt. Ltd., Gurgaon under Rule 173Q of erstwhile Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944 ; (v) I impose a penalty of Rs. 20,00,000/- (Rupees Twenty lacs only) on Sh. Vinod Kumar Bansal, Director-cum- Chairman of M/s. Aravali India Ltd. Hansi under Rule 209A of erstwhile Central Excise Rules, 1944; (vi I impose a penalty of Rs. 10,00,000/-(Rs. Ten Lacs only) on Sh. S.K. Gupta, Director of M/s. S.K.& Co. Pvt. Ltd., Gurgaon under Rule 209A of erstwhile Central Excise Rules, 1944; (vii) I impose a penalty of Rs. 10,00,000/- (Rs. Ten Lacs only) on Sh. Anil Kumar Goyal, Partner of M/s. Rohan Roadways, 7305, Aram Nagar, Paharganj, New Delhi under Rule 209A of erstwhile Central Excise Rules, 1944.";