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of <h1>Tribunal reduces penalty under Rule 25, emphasizes duty determination methodology.</h1> <h3>STANDARD INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-I</h3> STANDARD INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-I - 2019 (368) E.L.T. 970 (Tri. - Mumbai) Issues:- Appeal against Order-in-Appeal No. SB/18/M-IV/2010- Violation of principles of natural justice- Determination of duty based on transaction value- Applicability of Circulars No. 422/55/98-CX and 581/18/2001-CX- Imposition of penalty under Rule 25 of Central Excise Rules, 2002Appeal against Order-in-Appeal:The appellant appealed against Order-in-Appeal No. SB/18/M-IV/2010 issued by the Commissioner of Central Excise (Appeals), Mumbai-I. The case involved the clearance of processed textile fabrics against CT-3 certificate/AR-3A to their unit at KFTZ, Kandla, which were later returned and cleared at Mumbai. The appellant was issued a show cause notice for short payment of duty, which was confirmed with interest and penalty. The appeal was filed due to dissatisfaction with the order.Violation of Principles of Natural Justice:The appellant argued that in the first round of litigation before the Tribunal, all raised issues were not considered, leading to a violation of natural justice principles. They contended that the adjudicating authority confirmed the demand without considering that the goods were sold in the open market after being returned, suggesting that the transaction value at which the goods were sold should have been considered for duty determination.Determination of Duty Based on Transaction Value:The Revenue argued that Circulars No. 422/55/98-CX and 581/18/2001-CX applied to the case as the goods were returned after 8 years without being used by the Kandla FTZ unit. The dispute centered on the methodology for determining duty when goods are diverted to the local market instead of being used for the intended purpose. The Tribunal found no discrepancy in adopting the methodology from the circulars, rejecting the appellant's request to consider the transaction value of the diverted goods.Applicability of Circulars and Penalty Imposition:After considering both sides and the records, the Tribunal noted that the goods were cleared for export but were returned and sold domestically, resulting in a duty shortfall. The methodology from the circulars was deemed appropriate for duty determination in such cases. However, the penalty imposed under Rule 25 of Central Excise Rules, 2002 was considered excessive, leading to a reduction from Rs. 5,64,333 to Rs. 50,000. Consequently, the appeal was partly allowed based on the reduced penalty amount, while confirming the duty determination methodology from the circulars.Conclusion:The Tribunal partially allowed the appeal by reducing the penalty imposed under Rule 25 of Central Excise Rules, 2002. The decision upheld the duty determination methodology based on circulars and emphasized the need to consider the circumstances of the case when imposing penalties.
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