2008 (12) TMI 464 - AT - Central Excise

Summary

In the appellate tribunal CESTAT, Ahmedabad case of 2008 (12) TMI 464, Shri B.S.V. Murthy presided over the representation by Shri S.R. Prasad, SDR for the Appellant, and Shri Hardik Modh, Advocatefore the Respondent. The respondents discovered in March that they were not entitled to the SSI exemption Notification and voluntarily paid the differential duty with interest. Subsequently, a show cause notice was issued and a penalty of Rs. 10,000 was levied on the respondents under Rule 25 read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) found that imposing an equal penalty under Section 11AC was unwarranted and that the penalty of Rs. 10,000 was fair and adequate. The Revenue appealed this decision.

The Revenue argued that the penalty should have been equal to the duty payable, citing the Supreme Court's decision in M/s. Dharmendra Textiles. Conversely, Shri Hardik Modh, representing the respondents, referenced the Bombay High Court's ruling in M/s. Innotech Pharmaceuticals Ltd., contending that only a penalty under Rule 25 was applicable in this case. The Commissioner (Appeals) erred in mentioning Section 11AC. The respondents requested an adjournment to submit cross-objections for condonation of delay, as failure to appeal could result in a penalty enhancement by the Tribunal.

After considering both sides' arguments, it was found that the Asst. Commissioner had confirmed the demand under Section 11A without invoking the proviso, rendering the penalty under Section 11AC irrelevant. The show cause notice was issued within the time limit, and no extended period was invoked. The Asst. Commissioner's penalty under Rule 25 was deemed correct, although the mention of Section 11AC was in error. The Commissioner (Appeals) upheld the penalty without referencing Rule 25. No suppression should have been applied as the respondents voluntarily rectified the duty omission. Consequently, the appeal filed by the Revenue was rejected, with the penalty on the respondents deemed to have been imposed under Rule 25 of the Central Excise Rules. The decision was pronounced in court.