2009 (12) TMI 386 - AT - Central Excise

Tribunal remands case for penalty reassessment under Central Excise Act

The Tribunal remanded the case back to the adjudicating authority for reevaluation of the penalty under Section 11AC of the Central Excise Act, 1944. It ... Penalty- Held that- absent of factual findings therefore. No doubt duty arisen and discharged by assessee. Penalty not to be automatically levied without a finding in respect of penalty as its impossibility depends on fitness of circumstances of case. No such circumstances brought to record. Thus remand the matter back. Issues involved:1. Levy of penalty under Section 11AC of Central Excise Act, 1944 without proper findings.2. Requirement of factual findings for imposition of penalty as per the law laid down by the Apex Court.3. Remand to the adjudicating authority for reevaluation of penalty in light of relevant judgments.4. Appellant's right to option under Section 11AC for penalty determination.Analysis:1. The appellant argued that the mere confirmation of duty by lower authorities does not automatically warrant the imposition of a penalty under Section 11AC of the Central Excise Act, 1944. They contended that the element of Section 11A must be considered to understand the justification for the penalty, citing the judgment of the Apex Court in the case of Rajasthan Spinning and Weaving Mills. The appellant emphasized that without a proper finding related to penalty, no penalty should be levied.2. The Joint CDR representing the respondent countered by stating that since the appellant did not present a case before the adjudicating authority and paid the levied duty without contesting the allegations, they should be subjected to the penalty. The respondent argued for the confirmation of the appellate order.3. The Tribunal acknowledged that while duty liability existed and was paid by the appellant, the automatic imposition of a penalty without a specific finding related to penalty was not justified. The Tribunal highlighted that the fitness of circumstances in each case determines the imposition of a penalty, which was not adequately addressed in this instance. The Tribunal emphasized the need for factual findings before levying a penalty.4. Considering that the judgment in the case of Rajasthan Spinning & Weaving Mills was not available to the lower authorities, the Tribunal deemed it necessary to remand the matter back to the adjudicating authority. The Tribunal emphasized the importance of testing the facts in light of the Apex Court's judgment, which calls for a detailed examination of the circumstances before levying a penalty.5. The Tribunal further noted that the appellant, having paid the duty and interest, should be subject to penalty only in accordance with the law laid down by the Hon'ble High Court in the case of K.P. Pouches. The Tribunal highlighted the appellant's right to choose under Section 11AC for determining the penalty. Consequently, the matter was remanded to the adjudicating authority for a fresh determination of the penalty issue, ensuring the appellant's right to a hearing during the process. The Tribunal confirmed the levy of duty and interest but set aside the penalty portion for reevaluation.