2005 (7) TMI 498 - AT - Central Excise

Summary

Issues:
1. Denial of benefit of Notification No. 5/98-C.E. on cotton yarn clearance.
2. Treatment of sale price as cum duty price and imposition of penalty under Section 11AC.
3. Challenge against the imposition of penalty in respect of Additional Excise duty.
4. Clarification on the form of cotton yarn cleared - hank or tube.
5. Entitlement to cum duty benefit based on the Supreme Court's decision.
6. Imposition of penalty on the appellants and directors.

Analysis:

1. The appeal was filed against the Order-in-Appeal confirming the demand after denying the benefit of Notification No. 5/98-C.E. for cotton yarn clearance. The Commissioner (Appeals) treated the sale price as cum duty price and imposed a penalty under Section 11AC. The contention was that the appellants cleared yarn in hank form and were entitled to the exemption. However, the Revenue argued that duty was demanded for yarn cleared in tube form, hence no entitlement to the benefit of the notification.

2. The Revenue challenged the Order where sale price was treated as cum duty price and no penalty was imposed for Additional Excise duty. The appellants produced samples of cotton yarn cleared, showing a distinction between hank and tube forms. The Tribunal found no issue with denying the benefit of the notification based on the form of clearance. Additionally, the Review petition by the Revenue related to a previous case was dismissed by the Supreme Court, affirming the appellants' entitlement to the cum duty benefit.

3. Regarding penalties, the Tribunal referred to a Supreme Court case stating that the Adjudicating Authority must impose the lesser penalty when mandatory under the Act. Considering the circumstances, a consolidated penalty of Rs. 7 lakhs was deemed appropriate. Furthermore, the appellants appealed against personal penalties imposed on the directors, which were set aside due to the lack of findings indicating intent to evade duty payment.

4. The judgment concluded by disposing of the appeals based on the above considerations, emphasizing the entitlement to the cum duty benefit, the imposition of a consolidated penalty, and the setting aside of personal penalties on the directors due to the absence of evidence of intent to evade duty payment.