2004 (3) TMI 647 - AT - Central Excise

Summary

Issues: Imposition of penalty without raising demand of duty, challenge against penalty and redemption fine, duty exemption, clarification sought from the Department, payment of duty, duty demand in show cause notice, penalty under Rule 25, penalty under Section 11AC, seizure of goods, redemption fine and penalty imposition.

In this case, the issue revolved around the imposition of penalty without raising a demand of duty. The appellants challenged the penalty and redemption fine imposed on them under Rule 25 of the Rules for seized goods. Initially, the garments manufactured by the appellants were duty-exempt, but duty was imposed through a subsequent notification. The appellants sought clarification from the Department regarding their duty liability, paid the duty for goods cleared, and no duty demand was raised in the show cause notice. The seized branded goods were not cleared without duty payment and were not unaccounted for. Therefore, penalty under Rule 25 could not be imposed as the goods were not unaccounted. The penalty under Section 11AC was already set aside by the Commissioner (Appeals). Consequently, the tribunal set aside the impugned order, allowing the appeal of the appellants with any consequential relief permissible under the law.

The tribunal noted that the appellants had a strong case as penalty was imposed without a demand for duty. The appeal challenged the penalty and redemption fine for seized goods. The appellants initially enjoyed duty exemption, but duty was later imposed through a notification. They sought clarification from the Department on duty liability, paid duty for cleared goods, and no duty demand was raised in the show cause notice. The seized branded goods were not cleared without duty payment and were properly accounted for, negating the imposition of penalty under Rule 25. The penalty under Section 11AC was already set aside by the Commissioner (Appeals), leading the tribunal to set aside the impugned order and allow the appeal with any consequential relief available under the law.