2004 (2) TMI 427 - AT - Central Excise

Summary

Issues:
Challenge to validity of penalty under Rule 173Q and rejection of prayer for compounded levy scheme.

Analysis:
The appellants challenged the validity of the penalty imposed under Rule 173Q in the impugned order while also contesting the rejection of their request to pay duty under the compounded levy scheme. The learned Counsel argued that even if the appellants were not eligible for the scheme, no penalty should have been imposed as they had already paid excess duty and sought a refund. The Commissioner did not consider this aspect and rejected their application for the scheme, imposing the penalty. The Judge noted that the appellants had applied for the compounded levy scheme, paid duty accordingly, and claimed a refund of the excess amount. Despite being deemed ineligible for the scheme, the penalty under Rule 173Q was unwarranted since the duty had been paid, and no specific violation of the rule was pointed out. The Judge emphasized that the Commissioner should have examined the plea regarding the excess duty payment instead of simply rejecting the application. Consequently, the impugned order was deemed legally unsustainable and set aside.

The Judge's analysis highlighted that the Commissioner's order was flawed as it failed to consider the appellants' claim of excess duty payment and refund request. The Judge emphasized that even if the appellants were not entitled to the compounded levy scheme, imposing a penalty under Rule 173Q was unjustified since the duty had been paid, and no violation of the rule was demonstrated. The Judge directed the matter to be reconsidered by the adjudicating authority, instructing them to examine the appellants' plea regarding the excess duty payment and refund claim in adherence to the law. As a result, the appeal was disposed of in favor of the appellants, and the Commissioner's order was set aside, providing an opportunity for a proper assessment of the situation.