2004 (1) TMI 627 - AT - Central Excise

Summary

Issues:
- Imposition of penalty under Rules 96ZQ, 173Q, and 209A read with Section 11AC on the appellant assessee.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai, involved the appeal of an appellant assessee who is a manufacturing MMF under the scheme notified by Section 3A of the Central Excise Act. The appeal specifically challenged the imposition of penalties under Rules 96ZQ, 173Q, and 209A along with Section 11AC. The directors of the appellant, not contesting the duty amounts already paid, focused on contesting the penalties imposed.

Upon thorough consideration of the issue, the Tribunal found that the stenter/machinery was sealed on 31-7-2000 as required. However, when officers visited the premises on 2-8-2000, they discovered that the seals were broken, and the machines were operational. As a result, the liability to deposit the amount for August 2000 arose under Rules 96ZQ(1), (2), and (3), which was duly discharged by 5-8-2000 in compliance with the law. Given these circumstances, it was determined that no penalty was warranted under Rule 96ZQ(6).

Furthermore, the Tribunal referenced the decision of the Larger Bench in Mohinder Steels Ltd. - 2002 (145) E.L.T. 290 Para 7, which established that under Section 3A schemes, the comprehensive nature of the scheme excludes the applicability of general provisions in the Central Excise Act and the Rules. Consequently, the Tribunal concluded that penalties under Rule 173Q, 209A, or Section 11AC could not be sustained in this case.

As a result of the detailed analysis and legal considerations, the Tribunal allowed the appeals concerning penalties only, partially allowing the appeal in favor of the appellant assessee. The judgment highlighted the importance of adherence to statutory provisions and the specific scheme regulations in determining penalty liabilities under the Central Excise Act.