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of <h1>Penalty overturned for sugar mill diverting export sugar to domestic market</h1> The penalty imposed on a sugar mill under Section 25 of the Central Excise Rules, 2001 for diverting sugar meant for export to the domestic market was set ... Penalty - Export Issues:1. Imposition of penalty under Section 25 of the Central Excise Rules, 2001 on a sugar mill for diversion of sugar meant for export to the domestic market.Analysis:The case involved a sugar mill that had cleared sugar for export to merchant exporters but the sugar was diverted to the domestic market instead of being exported. The adjudicating authority imposed a penalty of Rs. 5 lakhs on the sugar mill under Section 25 of the Central Excise Rules, 2001, in addition to penalties on the exporters. The appellants challenged this penalty through an appeal.Upon hearing both sides, it was noted that the provisions of Rule 25 regarding confiscation and penalty were being considered. The rule outlined conditions under which penalties could be imposed, including contravention of provisions related to excisable goods. However, it was observed that clauses (a), (b), and (c) of sub-rule (1) of Rule 25 were not applicable to the appellants in this case.The submission made by the representative for the respondent, suggesting that clause (d) of Rule 25(1) was applicable, was deemed unacceptable. It was reasoned that there was no evidence to indicate an intention on the part of the appellants to evade duty payment. Additionally, there was no indication that the sugar mill was aware or had reason to believe that the sugar would not be exported by the merchant exporters. Consequently, the penalty imposed on the sugar mill was set aside, and the appeal was allowed.The judgment focused on the specific provisions of Rule 25 of the Central Excise Rules, 2001, and the lack of evidence supporting the imposition of a penalty on the sugar mill. It highlighted the importance of establishing intent and knowledge in cases involving penalties for contraventions related to excisable goods. The decision ultimately favored the appellants by overturning the penalty imposed on them.
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