2006 (2) TMI 348 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 173Q of Central Excise Rules without appeal from Revenue and in absence of order by original authority.

Analysis:
The appeal in question stemmed from an order by the Commissioner (Appeals) imposing a penalty of Rs. 1,75,000 under Rule 173Q of Central Excise Rules without any appeal from the Revenue and in the absence of an order by the original authority for penalty imposition. The appellants had paid duty before finalization of assessments, leading them to argue that penalty under Section 11AC was not applicable. The Commissioner (Appeals) accepted this plea, citing judgments like CCE v. Machino Montell, CCE v. Shree Krishna Pipe Industries, and Rashtriya Ispat Nigam Ltd. v. CCE, which clarified that penalty is not leviable under Rule 173Q if duty has been paid before the Show Cause Notice.

Upon hearing both sides, the Judge found the Commissioner (Appeals)'s order to be illegal and unsustainable in law. The original order did not impose any penalty under Rule 173Q, and the Revenue did not object to this. Despite acknowledging that penalty was not applicable under Section 11AC as per previous judgments, the Commissioner (Appeals) still issued a notice to the assessee regarding penalty under Rule 173Q and proceeded to impose it. The Judge emphasized that when duty is paid before the Show Cause Notice and assessments are provisional, penal provisions should not be invoked. Given the clarity of the law on this matter, the Judge deemed the Commissioner (Appeals)'s decision to penalize the appellants as unjustifiable and unsustainable. Consequently, the order imposing penalty under Rule 173Q was set aside, and the appeal was allowed.