2009 (5) TMI 703 - AT - Central Excise

Summary

Issues:
1. Imposition of penalties under Rule 27 of the Central Excise Rules, 1944.
2. Contention regarding penalties based on transport documents.
3. Adjudication of penalty imposition by the Revenue.

Analysis:
1. The Applicants/Appellants filed for waiver of pre-deposit of penalties under Rule 27 of the Central Excise Rules, 1944. The penalties of Rs. 1.50 lakh each on two companies and Rs. 20,000 on a director were under question. The contention was that while the penalties were imposed, the main demand regarding denial of CENVAT Credit and export benefits had been dropped by the Adjudicating Authority. The penalties were based on the grounds that two transport documents were found to be incorrect.

2. The Applicants/Appellants argued that since the primary demand was dropped, penalizing them solely for discrepancies in transport documents was unjustified. On the other hand, the Revenue contended that the penalties were rightly imposed due to the discrepancy in the vehicles used for transportation, not aligning with the information in the documents.

3. The Tribunal observed that penalties were imposed under Rule 27, which allows for a maximum penalty of Rs. 5,000. Given that the main demands were dropped after reviewing the evidence, the Applicants/Appellants had a strong case. Consequently, the Tribunal waived the pre-deposit of penalties and stayed the recovery during the appeal's pendency, thereby allowing the Stay Petitions.

This judgment highlights the importance of considering the circumstances under which penalties are imposed under specific rules, the relevance of dropped demands in penalty imposition, and the necessity for a strong case to support waiver requests.