2009 (6) TMI 713 - AT - Central Excise

Imposition of Penalty - Strictures against Commissioner - whether the Section 11AC of CEA is applicable to the facts of the case? - Held that - once it is held that no penalty is imposable then naturally Section 11AC of the Act is not attracted - penalty not imposable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether quantity discount in the form of free goods supplied to the distributor can be allowed as a deduction from the assessable value.
2. Whether Section 11AC of the Central Excise Act is applicable to the facts of the case.
3. Justification for the imposition of penalty.

Analysis:

1. The judgment addresses the issue of whether quantity discount in the form of free goods supplied to the distributor can be deducted from the assessable value. It references a Larger Bench decision of the Tribunal that had ruled against the appellant in a previous case. The Tribunal had earlier set aside penalties in similar cases, emphasizing that the issue involved legal interpretation. The Commissioner (Appeals) had cited a Supreme Court decision to argue against discretion in imposing penalties. However, the Tribunal held that since no penalty was imposable based on legal interpretation, Section 11AC of the Act was not applicable. The judgment highlighted the inconsistency of the Commissioner's decisions and the failure to follow Tribunal orders in the appellant's case.

2. The judgment delves into the applicability of Section 11AC of the Central Excise Act to the case. It clarifies that when Section 11AC is applicable, there is no discretion for penalty imposition. The Tribunal's decision that no penalty was imposable in this case led to the conclusion that Section 11AC was not attracted. The judgment also points out the Commissioner's contradictory stands in different orders within a short period, highlighting the failure to adhere to Tribunal decisions.

3. Finally, the judgment concludes that there is no justification for imposing penalties in the case at hand. It allows all the appeals with consequential relief to the appellants, emphasizing the lack of grounds for penalty imposition based on the legal interpretation and previous Tribunal decisions. The decision is based on the detailed analysis of the legal aspects surrounding the issue of penalty imposition and the application of Section 11AC in the context of the case.

In summary, the judgment thoroughly examines the issues related to quantity discounts, penalty imposition, and the application of Section 11AC of the Central Excise Act. It provides a detailed analysis of legal interpretations, Tribunal decisions, and the Commissioner's actions, ultimately leading to the allowance of the appeals and relief to the appellants based on the lack of justification for penalty imposition.