2003 PLP (Trib (PTD)

MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑This appeal is directed against the Order‑in‑Original No.529 of 2001, dated 30‑6‑2001 passed by the learned Deputy Collector (Adjudication) Lahore.

2. The Seizure Case No.15, dated 29‑3‑1994 was made out against the appellant for unlicensed manufacturing and illegal removal of 11400 nieces of Black Rose Hair Color, 184 pieces of Black Rose Shampoo and 144 pieces of Black Rose Hair Tonic valuing Rs. 3,05,752 at about 3‑30 p.m. on 29‑3‑1994. The appellant was alleged to have violated rules 7, 52, 52‑A, 226, 237, 238, 241 and 246 of the Central Excise Rules, 1944 read with sections 3, 6, 22, 23, 35, 35‑A and 39 of the Sales Tax Act, 1990. A show‑cause notice was issued to the appellant asking it to explain as to why central excise duty amounting to Rs.38,344 and sale tax, of Rs.51,764 alongwith additional central excise duty, additional tax and surcharge should not be recovered from it under rules 7 and 10 read with 3‑B of the Central Excise Rules, 1944 and sections 34 and 36 of the Sales Tax Act, 1990 and as to why penal action should not be taken under rule 210 of the Central Excise Rules, 1944. The case was decided in the first instance by the then learned Deputy Collector (South), Lahore vide Order‑in‑Original No.10, dated 12‑11‑1995 but the learned Collector (Adjudication) Central Zone, Lahore on an appeal remanded the case for a fresh decision after hearing the appellant.

3. This is now the second round of litigation between the parties.

4. The learned Adjudicating Officer through the impugned order has held the charge leveled in the show‑cause notice as proved against the appellant and has confiscated the goods but has allowed an option for their return on payment of Rs.2,000 as redemption fine. The appellant has further been asked to pay central excise duty amounting to Rs.38,344 and sales tax of Rs.51,764 alongwith additional tax under section 34 of the Sales Tax Act, 1990. A fine of Rs.5,000 has also been imposed under rule 210 of the aforesaid Rules. In para 7 of the impugned order, the learned Adjudicating Officer observed that since the amounts of Rs.38,344 on account of central excise duty and Rs.51,764 in respect of sales tax have already been.‑paid by the appellant, therefore, the demand raised in the impugned order shall be enforced to the extent of redemption fine, penalty and additional tax.

5. During the course of arguments, the learned counsel for the appellant on 26‑2‑2002 submitted that the appellant was willing to pay the amount of penalty of Rs.5,000 and redemption fine of Rs.2,

000. He further requested that keeping in view the peculiar circumstances of the case, the fact that litigation was pending for more than last seven years; that the appellant was a heart patient and had agreed to deposit the principal amount of sales tax and central excise duty on an assurance extended to him by the learned Adjudicating Officer that the additional tax would not be levied and that in this background of facts, (sic) additional tax may be waived.

6. Learned counsel for the appellant submitted his own affidavit in support of the fact that the learned Adjudication Officer had made an offer that in case the principal amount involved in the case was deposited then a normal penalty would be imposed and no additional duty or additional tax would be levied. It was further urged that keeping in view the abovesaid offer, the appellant deposited the principal amount of sales tax and central excise duty amounting to Rs.90,108.

7. We have considered the arguments and have also examined the record. The dispute admittedly related to the year 1994 in respect of which the show‑cause notice was issued in May, 1994. Admittedly the principal amount of sales tax and principal amount of central excise duty have been deposited by the appellant on 1‑9‑2000. This was stated by the learned D.R. on 26‑2‑2002 and he also stated that no arrears were outstanding against the appellant on account of sales tax or central excise duty. The imposition of additional tax was within the discretion of the learned Adjudicating Officer in view of the provision contained in section 34 as it existed earlier to the amendment introduced in this section in the year 1996. Earlier to the amendment, the appellant would be held liable to pay additional tax if the facts and circumstances justified the said levy. It means that it was purely within the discretion of the learned Adjudicating Officer to impose any additional tax or not but after 1996, the words "liable to pay" have been substituted with the words "shall pay" which indicates that prima facie the discretion with the learned Adjudicating Officer has been taken away. However, despite this change in the phraseology of the section 34 there may be cases which may call for judicial review of the amount adjudged on account or additional tax in case there are any compelling reasons for that. However, since this case started in the year 1994 when the learned Adjudicating Officer did have the discretion, therefore, it is not a case which is hit by the amendment introduced in the year 1996 in section 34 of the Sales Tax Act, 1990. The peculiar circumstances of the case as detailed above make us believe that it was a fit case in which the discretion should have been exercised in favour of the appellant. The additional tax is remitted. The appellant will pay the amount of penalty of Rs.5,000 and redemption fine of Rs.2,

000. C.M.A./719/Tax (Trib.)??????????????????????????????????????????????????????????????????????? Appeal accepted.