2007 (1) TMI 25 - AT - Central Excise

penalty Alleged that appellant were clear the good without payment of duty and also not entered in RGI register - After considering the fact find the allegation right and where by the equal amount of penalty imposed on the appellant

Summary

Issues:
Imposition of penalty for non-payment of duty on processed fabrics.

Analysis:
1. The appellant challenged the imposition of a penalty of Rs.22,313 for non-payment of duty on processed man-made fabrics, although they did not dispute the duty demand confirmed by the Adjudicating authority. The discrepancy of 12,074 meters of fabrics was found during a physical verification at the factory premises. The appellant's partner admitted that duty was not paid on the cleared fabrics due to the excise clerk's oversight, which was rectified immediately upon discovery. A show cause notice was issued, leading to the confirmation of the duty demand and penalty by the adjudicating authority, a decision upheld by the Commissioner (Appeals).

2. The main argument raised by the appellant was that since the duty was paid before the show cause notice, there should be no pre-deposit of penalty. Citing the case of Rashtriya Ispat Nigam Ltd., the appellant contended that penalties should not be imposed in such cases. Additionally, reference was made to the decision of the Hon'ble MP High Court in the case of Sai Machine Tools Pvt. Ltd., emphasizing the Tribunal's discretion to reduce penalties.

3. The learned DR countered the appellant's argument by referring to the case of Machino Montell, where it was held that if duty is paid before the show cause notice, penalties can still be imposed. This decision was challenged and remanded by the Punjab & Haryana High Court, reinforcing the liability for penalties in situations where goods are cleared without duty payment.

4. The judgment emphasized that in the present case, the appellant admitted to the clearance of goods without paying duty or entering them in the required register. Drawing a distinction from the Rashtriya Ispat case, where the duty was paid after a misunderstanding about entitlement to duty benefits, the judgment concluded that penalties were applicable in the current scenario. Citing the Sai Machine Tools Pvt. Ltd. case, it was reaffirmed that penalties under Section 11AC of the Act were warranted when goods were cleared without initial duty payment. Given the admitted facts of the case, including the failure to pay duty and register the goods, the imposed penalty was deemed appropriate, with no grounds for appeal.

(Order dictated and pronounced in the open Court on 3-1-2007)