2006 (2) TMI 455 - AT - Central Excise

Summary

Issues:
Rectification of mistake apparent from the record under Section 35-C(2) of the Central Excise Act, 1944 regarding the disallowance of penalty under Rule 173-Q of Central Excise Rules, 1944.

Analysis:
The case involved a Misc. Application for Rectification of Mistake under Section 35-C(2) of the Central Excise Act, 1944, concerning the disallowance of penalty under Rule 173-Q of Central Excise Rules, 1944. The Revenue contended that the Tribunal had erroneously disallowed the penalty on the mistaken belief that Rule 173-Q was not in force during the relevant period. The Revenue argued that Rule 173-Q was indeed in force until 30-6-2001, before the commencement of subsequent rules. The Tribunal agreed that Rule 173-Q was operational during the disputed period and recalled the previous order for necessary modifications as per Section 35-C(2) of the Act.

The Revenue sought the re-imposition of the penalty under Rule 173-Q, emphasizing that the appellants had cleared goods without duty payment, leading to a demand for duty and penalty. However, the Tribunal noted that the appellants were a public sector company and considered the issue trivial. The only remaining issues were the interest liability under Section 11-AB and the penalty imposed by the Commissioner. The Revenue argued for penal action due to misinterpretation, while the appellants relied on a Supreme Court case highlighting the necessity of specific notice regarding contraventions under Rule 173-Q.

Ultimately, the Tribunal held that while Rule 173-Q was in force during the disputed period, no penalty was justifiable as the appellants were not adequately informed of the contravention specifics. Citing the Supreme Court's guidance on the importance of clear notice, the Tribunal concluded that penal provisions existed but were not enforceable due to the lack of precise information provided to the assessees. Consequently, the Misc. Application filed by the Revenue was disposed of accordingly.