2005 (5) TMI 439 - AT - Central Excise

Summary

Issues:
Quantum of penalty imposable on the appellants.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi pertained to the quantum of penalty to be imposed on the appellants. The appellants were accused of clandestinely removing 180 bags of D.P. sugar without paying duty to M/s. Hindustan Lever Ltd. The duty evaded amounted to Rs. 15,300, and the Vice-President of the appellant's company admitted to the charge and paid the duty before the adjudication of the show cause notice (SCN).

The adjudicating authority had imposed a penalty of Rs. one lakh on the appellants under Rule 173Q, which was upheld by the Commissioner (Appeals). However, the Tribunal noted that the penalty amount should be limited to the duty amount evaded, as per Section 11AC. Rule 173Q is subject to the provisions of this Section, meaning the penalty cannot exceed the duty amount. Since the duty amount was Rs. 15,300 and was paid by the appellants before the adjudication was completed, the penalty could only be equivalent to this amount. Therefore, the penalty of Rs. one lakh imposed on the appellants was deemed excessive and unjustifiable under the law.

Consequently, the Tribunal modified the impugned order, reducing the penalty to Rs. 15,300, the same as the duty amount evaded. The appeal of the appellants was disposed of with this adjustment, providing them with consequential relief as per the law. The decision was pronounced in open court by the Tribunal.

This judgment highlights the significance of ensuring that penalties imposed in cases of duty evasion do not exceed the actual duty amount evaded, as per the provisions of the relevant legal framework. It emphasizes the principle that penalties should be proportionate to the offense committed, aligning with the duty amount involved in the case.