TaxTMI 
TaxTMI 
1985 (3) TMI 253
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....partment and had also applied for issue of Central Excise licence. The clearances between Rs. 4 lakhs and Rs. 5 lakhs were effected on Central Excise gate passes besides factory's own challans and invoices but no records were maintained by them in respect of P and P medicines produced and cleared during the period. L-4 Licence was issued to the appellants on 22-8-1979. 2. The officers found that P and P medicines worth Rs. 1,94,014.29 were lying packed in the factory's store room and those were ready for .delivery but without accountal in the statutory R.G. 1 records. Those were seized for violation of the Central Excise Rules. 3. The officers also found one delivery van No. USF-4833 parked inside the factory gate of the appellants and the said van was loaded with P and P medicines worth Rs. 4315.20.Since the appellants had not issued any Central Excise gate pass covering the transport of the P and P medicines, the goods and the van were seized for violation of the Central Excise Rules. "On scrutiny of the records, it was further observed that the appellants had cleared P and P medicines worth Rs. 1,50,584.00 during the period from 14-9-1979 to 20-9-1979, over and a....
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....ation of P and P medicines worth Rs. 1,36,049.80 seized from the various and from various godowns-cum-distribution centers at Kanpur, Madras, Patna and Calcutta under Rules 9(2), 52-A, 226 and 173-Q of the Central Excise Rules, 1944 but allowed their redemption on payment of redemption fine of Rs. 15,000/- on the same ground that the appellants had no intention to evade payment of duty. An order demanding duty of excise under Rule 9(2) on P and P medicines valued at Rs. 1,50,584 cleared by the appellants during the period 14-9-1979 to 20-9-1979 was also passed. Besides this, the Collector also imposed a penalty of Rs. 5,000 on the appellants under Rules 9(2), 52-A, 226 and 173Q of the Central Excise Rules, 1944. The delivery van was also ordered to be confiscated under Section 115(2) of the Customs Act, 1962 but was allowed to be redeemed on payment of Rs. 6.500/- as redemption fine. 7. On appeal before the Central Board of Excise and Customs, New Delhi, Shri Venkataraman, Member Central Board of Excise and Customs, by his Order No. 199-B of 81 dated 27-3-1981 reduced the fine in lieu of the confiscation of the goods valued at Rs. 1,94,014.29 seized from the factory's store....
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....tatutory obligation is the result of quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged or acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. 11. According to the learned consultant, as the authorities below have held that there was no intention to evade duty so the penal provisions of Rules 9(2) and 173-Q should not be invoked in imposing personal penalty of Rs. 5,000/-. 12. Regarding the imposition of redemption fine amounting to Rs. 10.000/- the learned consultant submitted that it is very excessive and harsh for the first offence. He pointed out that the aggregate duty involved is only Rs. 18,856.26 against the credit balance of Rs. 27,000/- in the PLA account. There has not been any intention to clear the goods without payment of duty. Had our intention been to evade duty the sum of Rs. 27,000/- as duty amount would not have been deposited by us in our PLA account, Shri-Srinivasan added. According to him, this penalty of Rs. 10.000/- is excessive and disproportionate the duty amount involved. Regarding redemption fine of Rs. 1,0....
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.... they had also violated the provisions of Central Excise Rules, but the question arises whether the imposition of penalty of Rs. 5,000/- can be said to be justified when the authorities below themselves feel that there was no intention to evade payment of duty on the part of the appellants. 15. Proceedings under Rule 173-Q are of quasi-criminal in nature. Department should exercise penal power with great caution. As has been laid down by the Hon'ble Supreme Court in the case of Hindustan Steel Mills Ltd. v. State of Orissa, the liability to pay penalty does not merely arise upon the proof of default. The order imposing penalty for failure to carry out statutory obligation is the result of quasi-criminal proceedings. Penalty will not ordinarily be imposed unless the party obliged or acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of authorities to be exercised judicially and on consideration of all the relevant circumstances. 16. The legal proposition as laid down by the H....