1995 (12) TMI 336 - AT - Central Excise

Summary

Issues: Application to amend Final Order under Section 35C of Central Excises and Salt Act, 1944; Consideration of penalty imposition; Interpretation of 'manufacture'; Application of extended period of limitation under proviso to Section 11A; Justification of penalty imposition by Collector; Comparison with judgments quashing penalties.

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the application by the appellants to amend Final Order No. 177/94-C under Section 35C of the Central Excises and Salt Act, 1944 was considered. The appellants sought rectification of a mistake apparent from the record in Appeal No. E/702/93-C against the Collector of Central Excise, Raipur. The issue of penalty imposition was raised, with the appellants arguing that they believed their crushing activity did not amount to manufacture, citing a judgment of the Madhya Pradesh High Court. The Tribunal had previously considered the meaning of 'manufacture' and the extended period of limitation under Section 11A but overlooked the penalty issue. The appellants requested setting aside the penalty based on precedents like the Padmini Products case remanded by the Supreme Court. The Tribunal noted that the appellants did not suppress facts or make wilful misstatements, restricting the duty demand to a normal period of 6 months, leading to the setting aside of the penalty.

The Respondent justified the penalty imposition based on the Collector's reasons in the adjudication order. However, the Tribunal referenced the Madhya Pradesh High Court's judgment quashing penalties in similar circumstances, emphasizing the harshness of penalties. Subsequently, the Tribunal analyzed judgments like the Padmini Products case and the New Polymer Industries case, where penalties were set aside due to findings on duty limitation issues. The Tribunal concluded that since the appellants were not guilty of suppression or wilful misstatement, and in line with the referenced decisions, the penalty was set aside, granting the appellants' application to amend the Final Order.

The judgment highlighted the importance of previous rulings in similar penalty imposition cases, emphasizing the need to consider factors like suppression of facts and wilful misstatements. By referencing relevant judgments and legal principles, the Tribunal justified setting aside the penalty in this case. The decision to amend the Final Order was based on the specific circumstances of the case and the legal precedents cited during the proceedings, ensuring a fair and just outcome for the appellants.