2005 (12) TMI 312 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 209 on the respondents for purchasing scrap, Appeal against penalty set aside by Commissioner (Appeals), Dispute regarding nature of scrap purchased, Allegations of ineligible input and collusion with supplier, Adjudication of penalty by the Tribunal.

Analysis:
The case involves an appeal by the Revenue against an Order-in-appeal that set aside a penalty imposed on the respondents. The dispute arose when the Department alleged that the scrap purchased by the respondents was not industrial scrap but scrap from Kabari, making them liable for penalty under Rule 209 of the Central Excise Rules. The adjudicating authority imposed a penalty on the respondents, which was later set aside by the Commissioner (Appeals) who deemed the penalty to be based on assumptions and presumptions.

The Revenue contended that the penalty under Rule 209 was justified as the respondents were aware that the scrap purchased was ineligible input. The Department relied on investigations conducted at the supplier's factory where discrepancies were found in the clearance of goods. On the other hand, the respondents argued that they had received and sold the scrap in question, supported by statements from the purchasers confirming the use of scrap in manufacturing ingots. The respondents claimed that Rule 209(bbb) did not apply, and the penalty was wrongly imposed.

The Tribunal examined the facts and found that the Commissioner (Appeals) had correctly noted that the adjudicating authority's doubts about the origin of the scrap were not substantiated. The respondents had purchased and sold the scrap as per invoices, with no evidence of collusion with the supplier. The Tribunal concluded that since there were no discrepancies or incorrect particulars in the transactions, Rule 209(bbb) did not apply. Therefore, the order-in-appeal setting aside the penalty was upheld, and the Department's appeal was dismissed.