2004 (3) TMI 580 - AT - Central Excise

Summary

Issues:
Challenge to duty imposition and penalty reduction based on pre-deposit of duty.

Analysis:
The appeal before the Appellate Tribunal challenged the duty imposition of Rs. 1,50,000 on the appellants, who were manufacturing Magnetic Mattresses and sought Small Scale Exemption Notification benefits. The dispute arose when it was discovered that the goods were branded under another manufacturer's name, leading to denial of the exemption and imposition of duty by the Adjudicating authority. Initially, a penalty of Rs. 6,84,681 was imposed, which was later reduced to Rs. 1,50,000 by the Commissioner (Appeals) upon appeal by the appellants.

The appellant's primary argument was that since duty was deposited before the show cause notice was issued, they should not face penal action. They cited precedents like Siddaganga Cements Pvt. Ltd. and Ashok Leyland Ltd. to support their stance. In contrast, the Revenue contended that the appellants did not disclose the branding issue when availing the exemption, referencing the Elephanta Gases Ltd. case to justify their position.

The Tribunal examined the conflicting arguments and referred to the Elephanta Gases Ltd. case, which emphasized that penalties are applicable when manufacturers breach Central Excise Act/Rules with the intention to evade duty payment. Citing the J.B. Nagarkar case, the Tribunal affirmed that penalties are mandatory for violations. Consequently, while acknowledging the pre-deposit of duty, the Tribunal upheld the penal action but reduced the penalty to Rs. 70,000 considering the case's circumstances. Ultimately, the appeal was disposed of with the modified penalty amount.