2008 (7) TMI 754 - AT - Central Excise

Penalty - Valuation - Held that - there was no deliberate intention to evade payment of duty. It is the only method of valuation which was under dispute. Once the dispute has been settled and the assessee had paid the duty along with interest, therefore there was no reason for imposition of penalty - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty for clearing physician samples without following correct valuation method.
2. Dispute regarding the method of valuation of physician samples.
3. Allegation of violation of Central Excise Valuation Rules.
4. Application of Board's Circular on valuation.
5. Justification for imposition of penalty.

Issue 1: Imposition of Penalty
The appeal arose from an Order-in-Appeal confirming the imposition of penalty on the appellants for clearing physician samples without following the correct valuation method. The appellants had already deposited the duty along with interest but contested the penalty imposition.

Issue 2: Dispute on Valuation Method
The dispute revolved around the method of valuation of physician samples. The appellants had initially valued the goods based on Rule 8 of the Central Excise Valuation Rules, but the Revenue claimed a higher duty based on a Board's Circular requiring valuation under Rule 4. The appellants revised the valuation method after a judgment by the Bombay High Court in a related case.

Issue 3: Alleged Violation of Rules
The Revenue alleged violations of Rule 4 and 6 of the Central Excise Rules by the appellants. However, the Tribunal found that the appellants had self-assessed the goods and paid the duty as required, hence no violation of the rules was established.

Issue 4: Application of Board's Circular
The Revenue argued that the penalty was justified due to non-compliance with the Board's Circular on valuation. The Tribunal noted that the dispute was primarily about the method of valuation and that the appellants had acted in good faith based on previous judgments.

Issue 5: Justification for Penalty Imposition
After considering both sides' submissions, the Tribunal concluded that there was no deliberate intention to evade duty payment. The appellants had followed judgments to determine the correct valuation method and had paid the duty accordingly. The Tribunal, following the Chennai Bench's precedent, set aside the penalty, as there was no violation of Rule 4 & 6 of the Central Excise Rules.

In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed on the appellants. The judgment emphasized that the penalty was unwarranted as there was no deliberate violation of rules, and the appellants had acted in good faith based on legal interpretations and judgments.