2008 (11) TMI 482 - AT - Central Excise

Summary

Issues involved: Differential duty on goods sold at higher price from depot/consignment agents' place, change in definition of "place of removal," imposition of penalty under Rule 173Q, invocation of Section 11AC in show-cause notice.

Differential Duty and Change in "Place of Removal": The appeal before the Appellate Tribunal CESTAT, Kolkata pertained to the demand of a differential duty for the period from February 1996 to February 1997. The appellants were alleged to have sold goods at a higher price from the depot/consignment agents' place after clearance from the factory gate. The appellant argued that the definition of "place of removal" was altered only from September 28, 1996, and thus, they should only be liable to pay the differential duty from that date onwards. It was contended that sales made independently from the factory gate prior to this change should be considered as normal price under Section 4(1) of the Act. The Tribunal agreed with this argument, confirming the demand only for the period from September 28, 1996, to February 28, 1997, amounting to Rs. 2,70,568. The demand for the earlier period was set aside as duty had been paid based on the normal price at the factory gate during that time.

Imposition of Penalty under Rule 173Q: The appellant also sought a reduction in the penalty imposed, arguing that the entire demand was calculated based on information provided by them. The penalty had been confirmed under Rule 173Q of the Central Excise Act, 1944. The Tribunal, after considering the circumstances, reduced the penalty from the original amount to Rs. 75,000. It was noted that since penalty under Section 11AC was not confirmed but under Rule 173Q, equal penalty was deemed unwarranted due to the appellant's cooperation and the specific circumstances of the case.

Conclusion: The Tribunal partially allowed the appeal, confirming the demand for the period post the change in the definition of "place of removal" and reducing the penalty imposed under Rule 173Q. The decision was made after considering the legal changes, the normal pricing at the factory gate, and the appellant's cooperation during the proceedings.