2007 (1) TMI 487 - AT - Central Excise

Summary

Issues:
1. Appeal against penalty imposed under Section 11A of Central Excise and Rule 26 of the Cenvat Credit Rules.

Analysis:
The appellants, engaged in manufacturing cough drops and availing small scale exemption, were found manufacturing and clearing cough drops under brand names not entitled to the exemption. Upon Revenue officers' discovery, the appellants deposited duty and requested no show cause notice. The adjudicating authority confirmed a demand of Rs. 48,034 and imposed a penalty. The appellant argued non-liability for penal action under Section 11-B(2) of the Central Excise Act.

The Revenue contended that the appellants deposited duty following the Revenue's direction, not voluntarily, thus Section 11B of the Act didn't apply due to non-willful suppression. The Revenue argued that penalties were rightfully imposed, citing the Gujarat High Court's decision allowing authorities to impose reduced penalties under Section 11AC. The Tribunal found the appellants ineligible for small scale exemption due to manufacturing branded goods, thus liable for penalty under Section 11AC. The penalty was reduced to Rs. 15,000 based on the assessing authority's discretion.

In conclusion, the Tribunal upheld the impugned order, reducing the penalty to Rs. 15,000 under Section 11AC. The appeal was allowed based on the circumstances and legal provisions, emphasizing the appellants' obligation to pay duty for branded goods not covered by the small scale exemption notification.