2001 (8) TMI 155 - AT - Central Excise

Revenue's Penalty Appeal Dismissed, Assessee's Appeal Allowed with Penalty Set Aside

The Tribunal dismissed the Revenue's appeal seeking mandatory penalty imposition under Section 11AC and allowed the assessee's appeal, setting aside the ... Penalty - Accounts and Returns Issues:1. Duty recovery and penalty imposition under Central Excise Act, 1944.2. Justification of penalty under Section 11AC and Rule 173Q.3. Appeal against the Commissioner (Appeals) decision.4. Application for waiver of pre-deposit.5. Interpretation of penalty imposition under Section 11AC.6. Applicability of Tribunal judgments in similar cases.Issue 1: Duty recovery and penalty imposition under Central Excise Act, 1944:The case involved M/s. Stellar Chemical Laboratories Pvt. Ltd. manufacturing drugs where goods worth Rs. 16,09,695/- were cleared without proper duty entries in registers. A show cause notice was issued for duty recovery under Rule 292 with Section 11A of the Central Excise Act, 1944. Penalty was imposed under Section 11AC and Rule 173Q(1) by the Joint Commissioner, alleging inadvertence.Issue 2: Justification of penalty under Section 11AC and Rule 173Q:The Commissioner (Appeals) analyzed the case and found no mala fide intention by the appellants to evade duty payment. It was observed that the goods were cleared with proper details and voluntary duty debit before the show cause notice. While penalty under Section 11AC was deemed unjustified, a penalty under Rule 173Q was justified due to contravention of provisions.Issue 3: Appeal against the Commissioner (Appeals) decision:The assessee appealed against the Commissioner (Appeals) decision, arguing for remittance of the penalty under Rule 173Q. Additionally, the Revenue filed an appeal seeking penalty imposition under Section 11AC, claiming it as mandatory. The Tribunal referred to relevant judgments to dismiss the Revenue's appeal and allowed the assessee's appeal, setting aside the penalty under Rule 173Q.Issue 4: Application for waiver of pre-deposit:The assessee filed an application for waiver of pre-deposit in Appeal E/219/2001, which was granted. Both appeals and cross-objection were disposed of after the waiver was approved.Issue 5: Interpretation of penalty imposition under Section 11AC:The Tribunal cited a judgment in the case of Escorts JCB Ltd. v. C.C.E., New Delhi, stating that the maximum penalty limit under Section 11AC was not mandatory in all cases. Consequently, the Revenue's appeal claiming mandatory penalty imposition under Section 11AC was deemed baseless.Issue 6: Applicability of Tribunal judgments in similar cases:The Tribunal referred to judgments like Kellner Pharmaceuticals Ltd. v. C.C.E. and other relevant cases to support the decision. It was noted that penalty under Rule 173Q was not imposable in identical circumstances where there was sufficient balance in RG-23 accounts. The Tribunal upheld the assessee's appeal and dismissed the Revenue's appeal, concluding that no penalty under Rule 173Q was justified due to the absence of mala fide intent.