2004 (3) TMI 604 - AT - Central Excise

Summary

Issues:
1. Imposition of penalties on appellants for diversion of goods meant for export to home consumption without proper permission.

Analysis:
The case involved four appeals arising from identical facts where M/s. Jay Jagdish Sugar, a merchant-exporter, procured sugar for export purposes but could not export it due to cancellation of export orders. Consequently, the sugar was diverted for home consumption, and duty was paid. The appellants were issued show cause notices for penalty imposition under Rule 26 of Central Excise Rules, 2001.

The appellants did not contest the demand confirmation but challenged the imposition of personal penalties. They acknowledged procedural lapses in diverting goods for home consumption without proper authorization but argued that paying the duty before the show cause notice was sufficient. The Commissioner imposed penalties equivalent to the duty amounts paid by the appellants.

The tribunal found a procedural lapse on the part of M/s. Jay Jagdish Sugar and reduced the penalties imposed on them, considering the circumstances. The penalty was reduced from Rs. 78,34,195/- to Rs. 1,00,000/- and from Rs. 15,68,250/- to Rs. 50,000/- in different appeals. The penalties were reduced due to the appellants' self-payment of duty before the notice.

Regarding the other two appellants, who cleared sugar without duty payment based on certificates issued by the Superintendent, the tribunal held that the responsibility for export lay with the merchant-exporter. The tribunal found no evidence supporting the Commissioner's claim that the two appellants intentionally assisted in diverting goods for home consumption. Therefore, the penalties of Rs. 1,00,000/- each imposed on them were set aside, and their appeals were allowed.

In conclusion, the tribunal upheld penalties on M/s. Jay Jagdish Sugar but reduced the amounts due to procedural lapses. The penalties on the other two appellants were overturned due to lack of evidence supporting intentional wrongdoing. All four appeals were disposed of accordingly.