2002 (11) TMI 594 - AT - Central Excise

Summary

Issues involved:
Challenge against imposition of fine for alleged evasion of excise duty, applicability of penalty provisions under Sections 11AC and 11AB, interpretation of Rule 173Q for imposition of penalty and redemption fine.

Analysis:
1. The appellant, a manufacturer of Oxygen gas, challenged the imposition of a fine by the Commissioner for allegedly evading excise duty. The dispute arose from the appellant's supply of Oxygen gas to a company at a lower rate due to the provision of free power and water by the buyer. The appellant argued that there was no intentional suppression of facts regarding the free supplies, as it was part of a contractual agreement. The appellant contended that they paid the duty promptly upon realizing the error, and thus, should not be penalized. They also disputed the applicability of penalty provisions under Sections 11AC and 11AB to the demand period.

2. The Commissioner rejected the appellant's contentions, emphasizing that the failure to disclose the free supplies amounted to evasion of duty. The Commissioner held that the payment of duty before the issuance of a show cause notice does not absolve the appellant from penalty liability if there was an intent to evade duty. The Commissioner ruled that the penalty provisions under Sections 11AC and 11AB were applicable, leading to the imposition of a penalty equal to the demand of duty. The Commissioner also invoked Rule 173Q for the imposition of the penalty and redemption fine.

3. The appellant argued that since the penalty provisions were inserted after a major portion of the demand period, they should not be applied retrospectively. However, the Tribunal held that Rule 173Q would still apply for contraventions with the intent to evade duty. The Tribunal disagreed with the appellant's interpretation that paying duty before a notice absolves them of penalty, citing a Supreme Court decision. The Tribunal reduced the quantum of penalty imposed by the Commissioner but upheld the liability to pay penalty under Rule 173Q.

4. Regarding the redemption fine, the Tribunal upheld the imposition, stating that the appellant need not be a habitual offender for confiscation under Rule 173Q(2). The Tribunal directed the appellant to pay a consolidated amount towards penalty and fine. Ultimately, the Tribunal partially allowed the appeal, reducing the quantum of penalty imposed by the Commissioner.

In conclusion, the judgment addressed the issues of alleged duty evasion, applicability of penalty provisions, interpretation of Rule 173Q, and the imposition of redemption fine, providing a detailed analysis of the contentions raised by the appellant and the decisions made by the Commissioner and the Tribunal.