Central Excise - Whether penalty under CENVAT Credit Rules was to be imposed even if there was no mensrea? NO, rules HC
THE substantial question of law before the High Court was:
"Whether the penalty under Rule13(1) of CENVAT Credit Rules, 2002 was to be imposed even if there was no mens rea on the part of the assessee?
Both the parties agreed that the question of law is no longer res integra, as it stands decided by the Supreme Court of India in Commissioner of Central Excise, Chandigarh Versus Pepsi Foods Limited - wherein it has been held that:-
22. "It is well settled that when the statues create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires "mens-rea" as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible.
The Supreme Court had reminded itself of the fundamental principle:
"...that an accused person cannot be convicted without proof of mensrea, unless, from a consideration of the terms of the statute and other relevant circumstances, it clearly appears that must have been the intention of Parliament."
In view of the settled position of law, the High Court held that no other and further order is required to be passed in this appeal.
Please see Commissioner of Central Excise, Chandigarh Vs Saluja Exim -