- (1.) Heard the Counsel for the parties. The order under challenge is dated 07.07.2006 passed by Sales Tax Department, which proceeds on the premises that it has followed the law which shows that penalty and interest cannot be levied if the amount of duty was paid before the show-cause notice. The law which was relied upon by the Sales Tax is not in conformity with the law laid down by the Hon'ble Supreme Court of India in the case of "Union of India versus Rajasthan Spinning and
(2.) Weaving Mills", 2009 13 SCC 448, which reads as under:- "Sub-section (2-B) of Section 11-A provides that in case the person in default makes payment of the escaped amount of duty before the service of notice then the Revenue will not give him the notice under sub-section (1). This, perhaps, is the basis of the common though erroneous view that no penalty would be leviable if the escaped amount of duty is paid before the service of notice. It, however, overlooks the two Explanations qualifying the main provision. Explanation 1 makes it clear that the payment would, nevertheless, be subject to imposition of interest under Section 11-AB.
(3.) Explanation 2 makes it further clear that in case the escape of duty is intentional and by reason of deception the main provision of sub-section (2-B) will have no application." It is also brought to our notice that the case relied upon by the Tribunal in the matter of "Commissioner of Central Excise, Delhi-III versus M/s Machino Montell (1) Ltd. and another", 2004 168 ELT 466has been overruled by the Punjab and Haryana High Court. In that view of the matter, we are of the considered opinion that the order of the Sales Tax proceeds on wrong premises, which deserves to be set aside. The matter is remanded back for fresh consideration in accordance with law. Accordingly, this appeal is disposed of.;