2008 (6) TMI 507 - AT - Central Excise

Summary

Issues involved: Imposition of penalty under Rule 173Q of erstwhile Central Excise Rules, 1944.

The appellant filed an appeal against the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, amounting to Rs. 25,000. The show cause notice initially proposed recovery of duty on BOPP waste captively used in the factory for manufacturing wholly exempted goods, along with the penalty under Section 11AC of the Central Excise Act, 1944. A corrigendum was later issued substituting the penalty provision from Section 11AC to Rule 173Q. The appellant adjusted the amount and paid Rs. 1,57,221.00, which was confirmed by the adjudicating authority. The penalty was also imposed, which was upheld by the Commissioner (Appeals).

Upon review, it was found that the appellant had responded to the show cause notice before the corrigendum was issued, changing the penalty provision. The appellant argued that they paid the duty to avoid litigation, and hence, the imposition of penalty was unjustified. Considering the circumstances, the penalty was set aside, and the appeal was allowed.