2000 (12) TMI 339

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....for other purposes, other than for manufacture of Yarn CT-3, without payment of duty. When these defects were detected, the assessee was issued Show Cause Notice. He paid duty on 62,983 ltrs., diverted for other purposes. In the Adjudication proceedings, Dy. Commissioner levied Central Excise Duty amounting to Rs. 73,971/-, being the duty realisable on 1,980 ltrs. short received by the assessee and 62,983 ltrs. diverted for other use. Invoking the provisions contained in Section 11AC of the Central Excise Act, an equal amount was imposed as penalty. Rs. 20,000/- was also levied as penalty under Rule 173Q of the Central Excise Rules. Adjudicating Officer also directed the assessee to pay a sum of Rs. 5,080/-, being the duty on the Cotton Yar....

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.... not reach the appellant's factory. This argument, though quite attractive, cannot be of any assistance on the facts and circumstances of this case. Assessee was getting the HSD Oil presumably in conformity with the provisions contained in Rule 192. In such a situation, the liability to duty is governed by the provisions contained in Rule 196. Rule 196(1), inter alia, states that if any excisable goods obtained under Rule 192 are not duly accounted for as having been lost or destroyed by natural cause or by unavoidable accident during the transport from the place of procurement or from the appellant's premises or during handling or storage in the premises approved under Rule 192 applicant shall, on demand by the proper Officer immediately p....

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....11A shall also be liable to pay penalty equal to the duty so determined. Clause (2) of Section 11A envisages determination of duty payable by a person on whom notice under Sub-section (1) of that Section has been issued. Section 11A thus contemplates a situation where duty has not been leviedor paid or has been short-levied or short-paid and consequently a decision is arrived at on the duty leviable. In this case, no such situation contemplated by Section 11A has come into existence. This is more so because the noticee in this case was not the manufacturer of H.S.D. Oil. Hence, the duty liability which has been imposed on the assessee cannot be taken as a levy coming under Section 11A(2) of the Act. Viewed in this perspective, the impositio....