2002 (11) TMI 650 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Section 11AC of the Central Excise Act.

Analysis:
The case involved the imposition of a penalty under Section 11AC of the Central Excise Act amounting to Rs. 2,22,745. The appellant had not debited duty on 242 bags of cotton yarn, claiming it was due to oversight and not an intentional evasion of duty. The authorities found that the non-debit of duty had been ongoing, leading to the imposition of the penalty. The appellant argued that the penalty should only be commensurate with the value of the 8 bags of cotton yarn seized in the jeep. However, both authorities rejected this plea, leading to the appeal.

The appellant's consultant argued that there was no intentional evasion of duty, as all necessary documents had been prepared before the goods' removal, and there was a sufficient balance in the PLA. He referred to a Supreme Court judgment stating that the penalty need not be equal to the duty amount evaded. The consultant suggested that the penalty should be restricted to the duty liability on the 8 seized bags, amounting to Rs. 7,982.

The respondent opposed this argument, stating that the total duty involvement was Rs. 2,22,745, which had not been debited in the PLA until after the offense was detected. The respondent contended that the penalty was justified under Section 11AC.

Upon careful consideration, the judge found that the penalty imposed on the value of goods involving 242 bags was unjustified. The judge noted that the penalty should have been imposed under Rule 226 for procedural lapses, as all necessary documentation had been completed. Referring to legal precedents, the judge reduced the mandatory penalty under Section 11AC to Rs. 5,000, considering the duty liability on the seized 8 bags to be Rs. 7,982. The judge modified the order accordingly, disposing of the appeal in these terms.