2006 (12) TMI 431 - AT - Central Excise

Summary

Issues:
Violation of conditions of exemption notification, imposition of penalty, financial hardship of the appellant.

Violation of Conditions of Exemption Notification:
The appellant was required to pre-deposit duty amount due to the wrong availment of Cenvat credit under exemption Notification No. 8/03-C.E. The appellant inadvertently failed to opt for the exemption before availing it, leading to the initiation of action by the Revenue. The appellant acknowledged the violation and expressed willingness to pay the differential duty of Rs. 12,308. The Tribunal considered the appellant's financial distress, being a State Government undertaking with significant accumulated losses, and decided to allow the appeal based on the payment of the differential duty within a specified period.

Imposition of Penalty:
The appellant contested the imposition of a penalty along with the duty amount. The appellant's representative argued that the penalty was excessive, considering the circumstances of financial hardship faced by the appellant. The Tribunal, after considering the arguments presented, set aside the demand for the duty amount and equal penalty confirmed in the impugned order. The Tribunal emphasized the appellant's readiness to pay the differential duty promptly and the absence of any other serious infractions such as clandestine removal of goods.

Financial Hardship of the Appellant:
The appellant, a financially distressed State Government undertaking with significant accumulated losses, highlighted their inability to pay the penalty and requested leniency from the Tribunal. The appellant's representative emphasized the non-violation of specific CENVAT Rules and the absence of any illicit activities, stating that the only error was the failure to opt for the exemption before availing it. The Tribunal, considering the appellant's financial situation and their willingness to rectify the error by paying the differential duty, decided to grant relief by setting aside the penalty and confirming the appeal based on the payment of the duty within the stipulated timeframe.

This judgment showcases the Tribunal's consideration of the specific circumstances of the appellant, including financial distress, inadvertent violation of exemption conditions, and willingness to rectify the error promptly, leading to the decision to allow the appeal based on the payment of the differential duty amount.