2003 (11) TMI 547 - AT - Central Excise

Summary

Issues:
1. Whether penalty under Rule 173Q(1) can be sustained when a demand under Central Excise is dropped by the original authority.

Detailed Analysis:
The issue in this case revolved around the sustenance of a penalty under Rule 173Q(1) when a demand under Central Excise, related to clandestine removal of aerated water, was dropped by the original authority. The appellant contended that the penalty could not be sustained in the absence of a confirmed demand. The original authority did not uphold the demand, citing the appellant's failure to provide full accountability regarding dutiable goods and disclose complete facts about accounting and disposal of soft drinks. However, the Commissioner found no evidence of clandestine removal without duty payment or excess production of dutiable goods. Discrepancies in production figures were explained plausibly and remained unrebutted. The verification exercise by the Deputy Commissioner and Superintendent's report supported the appellant's explanations. As no violation with intent to evade duty or removal of non-duty paid goods was established, no demands were confirmed, leading to the conclusion that the penalty under Rule 173Q(1) could not be upheld.

In conclusion, the appellate tribunal ruled in favor of the appellant, setting aside the penalty under Rule 173Q(1) since no violation of rules with intent to evade duty or removal of non-duty paid goods was proven. The appeal was allowed based on the lack of evidence supporting the imposition of the penalty, given the absence of confirmed demands related to clandestine removal of aerated water.