2007 (9) TMI 168

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....ides.  The appellants filed these three appeals against the common impugned order whereby penalties were imposed on the appellants under Rule 25 read with Section 11A of Central Excise Act. 2. The brief facts of the case are that the appellants is a 100% EOU and as per the scheme, 100% EOU can clear the goods to another 100% EOU without payment of duty on production of necessary CT certifi....

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....officers.  Therefore, there is no willful intention to evade payment of duty.  The adjudicating authority also took into the fact that the appellants had deposited the duty alongwith interest before the issue of show cause notice and dropped the proceedings for imposition of penalty.  The revenue filed appeal and the Commissioner (Appeals) in the impugned order, imposed penalty. ....

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.... of CCE Delhi-III Vs Machino Montell (I) Ltd. [2006 -TIOL-276] held that if duty has been paid prior to issuance of show cause notice, penalty is not imposable under Section 11AC of the Act. 6. The contention of revenue is that as the appellants cleared the goods without payment of duty as per the requirement of procedure, the appellants should produce certificate to show that the goods were us....

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....authorities and revenue is not disputing the correctness of the necessary certificates.  Therefore, it cannot be held that appellants diverted the goods to the open market.  Further, I find that Hon'ble Punjab & Haryana High Court in the case of CCE Vs Sigma Steel Tubes supra held that in case duty is paid prior to issue of show cause notice, imposition of penalty is not sustainable. ....