2007 (8) TMI 608 - AT - Central Excise

Summary

Issues:
Appeal against Commissioner (Appeals) order regarding penalty under Rule 96ZQ(5)(ii) for non-payment of full amount during the period one stenter machine was sealed.

Analysis:
The case involved an appeal against the order of the Commissioner (Appeals) regarding the penalty imposed under Rule 96ZQ(5)(ii) for non-payment of the full amount during the period when one stenter machine was sealed. The appellant, working under a compounded levy scheme, had two stenter machines, one with five chambers and the other with four chambers. They sealed the stenter machine with four chambers on 30-6-2000 and reopened it on 17-7-2000 after due intimation. In July 2000, they paid Rs. 14 lakhs instead of Rs. 18 lakhs, claiming eligibility for abatement during the sealed machine period, but later paid the balance on 11-8-01.

The original authority confirmed the demand along with interest and imposed a penalty of Rs. 4 lakhs under Rule 96ZQ(5)(ii). The Commissioner (Appeals) held that the appellant should have paid the full amount and claimed abatement later as per Rule 96ZQ(7)(e), but reduced the penalty to Rs. 2 lakhs. The Tribunal considered the facts and noted that during the sealed period, the appellant was eligible for abatement, and the duty was paid, with abatement subsequently allowed after deducting interest on delayed payment.

The Tribunal observed that the question of whether the appellant should have paid Rs. 4 lakhs and claimed abatement afterward was procedural. The appellant's advocate argued for setting aside the penalty, contending that the penalty was not justified as they were eligible for abatement nearly equal to the demanded amount on the same issue. The Tribunal agreed, finding no justification to uphold the penalty imposed. Consequently, the appeal was allowed by setting aside the penalty, ruling in favor of the appellant.