2003 (7) TMI 622 - AT - Central Excise

Penalty reduced to Rs. 50,000 from Rs. 1 lakh in tax evasion case

The penalty amount in the case was initially reduced from Rs. 1 lakh to Rs. 75,000 but further decreased to Rs. 50,000. This reduction was due to the duty ... Penalty under Rule 173Q - Clandestine removal - Suppression of facts - Three times the value of goods removed as permissible penalty - Section 11AC not controlling penalty under Rule 173QPenalty under Rule 173Q - Three times the value of goods removed as permissible penalty - Section 11AC not controlling penalty under Rule 173Q - Clandestine removal - Suppression of facts - Validity of imposing penalty under Rule 173Q in excess of the duty evaded and whether the provisions of Section 11AC govern such penalty. - HELD THAT: - The Tribunal held that Rule 173Q authorises imposition of a penalty up to three times the value of goods removed clandestinely and is not controlled by the provisions of Section 11AC. In a case of clandestine removal or suppression regarding removal of goods, the special penal provision under Rule 173Q operates independently and may exceed the quantum of duty confirmed. The appellants' plea that penalty cannot exceed the duty evaded was rejected because the goods in question were removed clandestinely and were not entered in the record, and there was suppression of facts. Consequently, imposition of penalty under Rule 173Q was upheld on merits.Penalty under Rule 173Q was lawfully imposed notwithstanding that it exceeded the duty evaded; Section 11AC does not circumscribe Rule 173Q in cases of clandestine removal and suppression.Penalty under Rule 173Q - Clandestine removal - Appropriate quantum of penalty to be confirmed. - HELD THAT: - Although the Tribunal sustained the validity of the penalty imposed under Rule 173Q, it exercised its appellate discretion to moderate the amount in view of the facts that duty had been paid and the circumstances of the case. The original penalty imposed by the adjudicating authority was reduced by the Commissioner (Appeals) and further reduced by the Tribunal to an amount considered reasonable in the facts and circumstances.Penalty reduced to Rs. 50,000 and the remainder of the Commissioner (Appeals) order is maintained.Final Conclusion: The Tribunal affirms the imposition of penalty under Rule 173Q for clandestine removal and suppression, holds that Section 11AC does not limit the applicability of Rule 173Q, but in exercise of appellate discretion reduces the confirmed penalty to Rs. 50,000; the impugned order is otherwise upheld and the appeal is disposed of. The appeal was filed against the reduction in penalty amount from Rs. 1 lakh to Rs. 75,000 under Rule 173Q of the Rules. The penalty was further reduced to Rs. 50,000 as the duty evaded was Rs. 39,780. The penalty can be three times the value of goods removed clandestinely. The penalty was rightly imposed considering the suppression of facts, but reduced due to duty payment. The impugned order was maintained with the modification in penalty amount.