2006 (1) TMI 364 - AT - Central Excise

Summary

Issues:
1. Rectification of mistake in the Final Order regarding penalty, fine, and interest levied before the issue of show cause notice.
2. Imposition of penalty under Rule 26 of CER, 2002 without confiscation of goods.

Issue 1: Rectification of mistake in the Final Order regarding penalty, fine, and interest levied before the issue of show cause notice:

The Appellate Tribunal considered a misc. application seeking rectification of mistake in Final Order Nos. 891 to 897/2005, where the appellant was one of the parties involved. The Final Order pertained to seven parties and addressed the issue of whether penalty, fine, and interest were applicable when duty had been paid before the issuance of a show cause notice. After reviewing relevant judgments, the Tribunal noted that the duty had been paid before the notice, leading to the setting aside of orders related to fines, penalties, and interest. In the specific case of the appellant, no duty was demanded, only a penalty was imposed under Rule 26 of CER, 2002.

Issue 2: Imposition of penalty under Rule 26 of CER, 2002 without confiscation of goods:

The appellant's counsel argued that the penalty imposed was not due to the deposit of duty before the show cause notice but was solely for violating Rule 26 of CER, 2002. The counsel contended that Rule 26 did not apply since there was no proposal to confiscate goods, a prerequisite for imposing penalties. The Order-In-Original (OIO) indicated that duty had been paid before the show cause notice, leading to the conclusion that penalty under Rule 26 of CER was not applicable as there was no confiscation proposal. The Tribunal concurred that penalty under Rule 26 was not justifiable in the absence of a confiscation proposal, thereby directing the dropping of the penalty proceedings.

In conclusion, the Tribunal clarified that penalty under Rule 26 of CER, 2002 was not applicable in cases where duty had been paid before the issuance of a show cause notice and where there was no proposal for confiscation of goods. The judgment emphasized the importance of adherence to legal provisions and highlighted the circumstances under which penalties could be imposed under the relevant rules.