2004 (2) TMI 433 - AT - Central Excise

Summary

Issues involved:
Appeal against penalty imposition on a company for non-payment of Central Excise duty on capital goods/machinery procured by a 100% Export Oriented Unit.

Detailed Analysis:

1. Imposition of Penalty:
The Revenue filed an appeal against the setting aside of a penalty imposed on a company, M/s. Deepak Polyspin, by the Commissioner (Appeals). The Respondent, a 100% Export Oriented Unit, procured capital goods/machinery without paying Central Excise duty. When Central Excise Officers visited the factory premises, some machines/capital goods were not found, leading to an inquiry. The Respondents paid the duty amount on the capital goods/machinery, including the shortfall identified by the Officers. The Additional Commissioner confirmed the duty amount and imposed a penalty of Rs. 9 lakhs under Rule 173Q of the Central Excise Rules, 1944. However, the Commissioner (Appeals) set aside the penalty, stating that since the Respondents had paid the entire duty amount as per the debonding order, no penalty was imposable.

2. Legal Interpretation:
The key contention was whether the penalty imposed under Rule 173Q was justified. The learned SDR argued that the penalty was warranted as the Respondents contravened the provisions of Notification No. 1/95-C.E. by not having the capital goods/machinery available during physical verification. However, it was observed that the Respondents were governed by the provisions of Chapter V-A of the Central Excise Rules, which exempted them from the provisions of Chapter VII-A. Rule 173Q, under which the penalty was sought to be imposed, fell under Chapter VII-A, which did not apply to the Respondents covered by Chapter VA. Therefore, it was concluded that the penalty provision of Rule 173Q was not applicable to the Respondents, leading to the rejection of the Revenue's appeal.

3. Decision and Conclusion:
In light of the legal interpretation regarding the applicability of penalty provisions to the 100% Export Oriented Unit under Chapter VA of the Central Excise Rules, the appeal filed by the Revenue against the setting aside of the penalty on M/s. Deepak Polyspin was rejected by the Appellate Tribunal CESTAT, New Delhi. The judgment highlighted the specific rules governing Export Oriented Units and the inapplicability of certain penalty provisions to such units, ultimately leading to the dismissal of the Revenue's appeal.