2005 (9) TMI 391 - AT - Central Excise

Summary

Issues:
1. Modification of Final Order
2. Imposition of penalty under Section 11AC
3. Calculation of duty liability
4. Error apparent on record
5. Application of Supreme Court decision on rectification of mistakes

Analysis:
1. Modification of Final Order: The appellants filed a ROM application seeking modification of Final Order No. 263/2005. The Final Order established a relationship between the appellant's Company and another entity, ordering duty computation based on the selling price of the related entity. The penalty under Section 11AC was to be re-quantified for a specific period, and a consolidated penalty under various rules was reduced to Rs. 25,000.

2. Imposition of Penalty under Section 11AC: The learned Advocate argued that the imposition of a consolidated penalty of Rs. 25,000 was erroneous due to the appellants' eligibility for SSI exemption under specific notifications. The total value of clearances made by the appellants fell within the exemption limit, indicating no duty liability. It was contended that no contravention of the Central Excise Act occurred, hence the penalty was unwarranted.

3. Calculation of Duty Liability: The appellants' submissions highlighted that the total value of clearances remained within the exemption limit, absolving them of any duty liability. It was emphasized that when the demand for duty is unsustainable, the imposition of penalty also fails as per established legal principles.

4. Error Apparent on Record: The Tribunal acknowledged an error in the Final Order, noting that the penalty issue should have been left open given the appellants' compliance with exemption limits. The error was rectified by deleting specific sentences and substituting them to reflect that if duty liability is nil, no penalty should be levied, and penalties should only be imposed if duty liability exists.

5. Application of Supreme Court Decision: The Tribunal referred to a Supreme Court decision emphasizing that mistakes apparent from a perusal of the evidence, whether legal or factual, should be rectified. The Tribunal's decision to rectify the error in the Final Order aligned with the legal principle outlined in the Supreme Court case.

In conclusion, the Tribunal allowed the ROM application in favor of the appellants, rectifying the error in the Final Order and remanding the matter to the Original Authority for re-quantification of duty liability while keeping the imposition of penalties open based on the duty liability determination.