2002 (12) TMI 352 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 173H for not removing goods within six months as provided, applicability of penalty under Rule 210, validity of Trade Notice prescribing a time limit of six months, and justification for penalty imposition.

Analysis:

1. Imposition of Penalty under Rule 173H:
The appeal challenged the penalty of Rs. 1,000 imposed by the Commissioner (Appeals) for not removing certain goods for repairs/re-conditioning within the stipulated six-month period under Rule 173H. The appellant argued that the delay in clearance was due to rectifying defects in the goods, which required time and involved high costs. They contended that Rule 173H did not provide for a penalty, citing a relevant case law. However, the ld. DR supported the penalty, emphasizing that the breach of Rule 173H warranted penalty under Rule 210. The Tribunal noted that while the breach occurred, the goods were not retained to evade duty, and there was no intention to confiscate them. Ultimately, the Tribunal set aside the penalty, stating that penalties should serve curative and demonstrative purposes, not retributive, and that the breach did not warrant penalty imposition.

2. Applicability of Penalty under Rule 210:
The ld. DR argued that since there was a breach of Rule 173H, penalty under Rule 210 was justified. The Tribunal agreed that a penalty could be imposed for rule violations when no other penalty was specified. However, in this case, considering the circumstances and the absence of intent to evade duty, the Tribunal concluded that the breach did not warrant penalty under Rule 210, emphasizing that penalties should not be imposed as retributions but to achieve specific effects.

3. Validity of Trade Notice Prescribing Time Limit:
The appellant contended that they were not provided with a copy of Trade Notice No. 25/93, which prescribed a six-month time limit for goods clearance. They argued that since they were not aware of this notice, no penalty should be imposed. However, the Tribunal held that the Trade Notice, being a public document widely circulated, did not require individual service to the appellants. Citing a Supreme Court case, the Tribunal emphasized that penalties need not be imposed for technical breaches, especially when there was no intent to evade duty or confiscate goods. Consequently, the Tribunal found that the breach did not justify penalty imposition based on the Trade Notice.

4. Justification for Penalty Imposition:
The Tribunal, after considering all arguments and legal provisions, concluded that the penalty imposed under Rule 173H for not removing goods within the prescribed six-month period was not justified in this case. The Tribunal highlighted the purpose of penalties as corrective measures rather than punitive actions, emphasizing that penalties should not be imposed as a reflex for rule violations. Therefore, the Tribunal set aside the penalty and allowed the appeal, ruling in favor of the appellant.