2005 (11) TMI 320 - AT - Central Excise

Summary

Issues:
1. Reduction of quantum by the Commissioner (Appeals) in a central excise case.
2. Imposition of penalty under Rule 25 for failure to maintain records.
3. Applicability of Rule 25 in the absence of confiscation.

Analysis:

Issue 1: Reduction of quantum by the Commissioner (Appeals)
The appeal was filed by the Revenue against the Commissioner (Appeals) order that reduced the quantum. The central issue was the imposition of penalty of Rs. 50,000/-, which the Commissioner (A) reduced to Rs. 1,000/- based on the grounds that the goods were removed under proper central excise invoices. The Revenue contended that the respondents failed to record production and clearances for 16 days, indicating mala fide intent. The Tribunal noted that the respondents did not contest the duty liability but challenged the penalty amount. Ultimately, the Tribunal modified the penalty to Rs. 10,000/-, considering the provisions of Rule 25.

Issue 2: Imposition of penalty under Rule 25
The Assistant Commissioner confirmed the duty and imposed a penalty of Rs. 50,000/- under Rule 25 for anomalies detected during a visit to the manufacturer's premises. The Commissioner (A) reduced the penalty to Rs. 1,000/- based on leniency due to proper central excise invoices. The Revenue argued that the penalty should be at least Rs. 10,000/- as per Rule 25, which states that the penalty cannot exceed the duty sought to be evaded or Rs. 10,000/-, whichever is greater. The Tribunal agreed with the Revenue and enhanced the penalty to Rs. 10,000/-, considering the minimum penalty prescribed under Rule 25.

Issue 3: Applicability of Rule 25 in the absence of confiscation
The learned advocate argued that Rule 25 should not apply as no confiscation was ordered. However, the Tribunal found that Rule 25 could be invoked due to the confiscable nature of the goods, even if physical confiscation was not possible. The Tribunal held that the Commissioner (A) erred in not considering the minimum penalty prescribed under Rule 25 and enhanced the penalty to Rs. 10,000/- from Rs. 1,000/-.

In conclusion, the Tribunal disposed of the appeal by modifying the penalty amount to Rs. 10,000/- from Rs. 1,000/- imposed by the Commissioner (Appeals) under Rule 25, considering the confiscable nature of the goods and the provisions of the rule.