2007 (4) TMI 501 - AT - Central Excise

Summary

Issues:
Levy of penalty without specific charge notification and imposition of duty demand.

Analysis:
1. The appellant argued that the penalty imposed was unjust as the charge was not brought to their notice during the show cause reply, citing the judgment in Amrit Foods v. Commr. of Central Excise. They contended that the penalty should be waived based on the principle established in previous cases like Tata Motors Ltd. v. Commr. of C. Ex. The appellant highlighted that the duty amount had been deposited promptly, indicating no intention to evade payment.

2. The JDR representing the respondent argued that there was a breach of law due to the delayed duty payment, justifying the penalty imposition. The JDR emphasized that the duty was deposited only during the appeal process, necessitating the payment of interest along with the penalty.

3. Upon review, the Tribunal acknowledged that the penalty issue was not disputed. It was noted that the specific clause for penalty imposition under Rule 173Q of Central Excise Rules was not communicated to the appellant. Despite a residuary clause allowing penalty imposition, there was no evidence of an intention to evade payment. The appellant's conduct was deemed non-culpable, especially considering the prompt duty deposit upon Tribunal direction. The Tribunal emphasized the necessity of establishing mens rea for penalty imposition, which was absent in this case. Additionally, the Tribunal referenced judicial precedents, including the Amrit Food Products case and the Hindusthan Steel Ltd. case, to support the decision to waive the penalty. Following the legal principles outlined in the State of Madhya Pradesh v. BHEL case, the Tribunal decided to allow the appeal partially by waiving the penalty but upholding the duty demand.

4. Consequently, the appeal was partly allowed, with the penalty being waived while the duty demand was upheld. The Counter Objection of Revenue, which did not present any dispute points but supported the Appellate Authority's decision, was dismissed.