CESTAT dismisses Revenue appeal, reduces penalty amount, upholds Rs. 2,000 penalty.

The Appellate Tribunal CESTAT, New Delhi dismissed the Revenue's appeal for an increase in the penalty amount and partly accepted the cross-objections filed by the respondents. The Tribunal held that since the duty was paid before the show cause notice was issued, the penalty could not be upheld, referencing the case law precedent. As a result, the imposition of penalty against the respondents was set aside, and the reduced penalty amount of Rs. 2,000 was upheld.

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Issues:
1. Appeal for increase in penalty amount by Revenue.
2. Cross objections by respondents seeking to set aside duty amount and penalty.
3. Confirmation of duty and imposition of penalty.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, New Delhi involved the Revenue seeking an increase in the penalty amount, which the Commissioner (Appeals) had reduced from Rs. 50,000 to Rs. 2,000. The respondents, on the other hand, filed cross objections aiming to set aside both the duty amount and penalty entirely.

2. The facts of the case revealed that the respondents had availed credit of Rs. 4,39,623 based on a photocopy of a duplicate bill of entries in August 1999. Upon being informed by the central excise office that the credit was wrongly claimed, the respondents deposited the amount along with interest on 28-10-1999. Despite this, a show cause notice was issued to them on 24-11-1999, leading to the imposition of a penalty of Rs. 50,000 by the adjudicating authority. The respondents appealed against this order, challenging only the penalty, not the duty amount. The Commissioner (Appeals) reduced the penalty to Rs. 2,000.

3. The Tribunal noted that the respondents could not contest the confirmation of duty through their cross-objections since they did not dispute it during the appeal before the Commissioner (Appeals), where they solely contested the penalty. Referring to the judgment in the case of CCE, Delhi-III v. Machino Montell (I) Ltd., the Tribunal held that since the duty was paid before the show cause notice was issued, the penalty could not be upheld. Consequently, the plea of the Revenue for an increase in the penalty amount was rejected, and the imposition of penalty against the respondents was set aside.

4. In conclusion, the appeal of the Revenue was dismissed, and the cross-objections filed by the respondents were partly accepted concerning the penalty only. The Tribunal's decision was based on the legal principles established in relevant judgments and the specific circumstances of the case.

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