2005 (6) TMI 438 - AT - Central Excise

Summary

Issues:
Penalty under Rule 173Q for failure to intimate department about removal of capital goods to job worker.

Analysis:
The case involved the appellants who removed capital goods to their job worker for processing under Rule 57-S of the Central Excise Rules, 1944. The appellants did not inform the proper officer about this removal, leading to a penalty being proposed on them. The original authority imposed a penalty of Rs. 20,000, which was later reduced to Rs. 4,000 by the first appellate authority. The appellants were still dissatisfied and hence filed an appeal.

The authorized representative admitted the omission but clarified that it was not done with the intent to evade duty. The issue revolved around the contravention of Rule 57-S(7) regarding the failure to inform the department about the removal of capital goods to the job worker. The penalty was imposed under Rule 173Q, which had clauses relevant to contraventions of Modvat Rules and Central Excise Rules, 1944, with the intent to evade duty.

Upon examination, it was found that the penalty under Rule 173Q could only be imposed in cases where there was a contravention with the intent to evade payment of duty. In this instance, no such intent was established by any lower authority. Therefore, the imposition of the penalty on the appellants was deemed unwarranted. The judgment concluded by vacating the penalty and allowing the appeal.