1983 (8) TMI 260 - AT - Central Excise

Summary

Issues:
1. Applicability of Notification No. 71/78-C.E. for excise duty exemption.
2. Allegations of deliberate evasion of duty and concealment of facts.
3. Imposition of penalty and confiscation of goods.

Analysis:

Issue 1: Applicability of Notification No. 71/78-C.E. for excise duty exemption
The appellants, manufacturers of asbestos cement pipes, claimed total exemption from duty under Notification No. 71/78-C.E. until a subsequent amending Notification No. 141/79-C.E. was issued, limiting the exemption based on total clearances from all factories owned by the same manufacturer. The appellants argued ignorance of the amendment, stating local officers did not inform them. The Tribunal found the appellants' claim of ignorance unconvincing, considering the statutory nature of the notification and the appellants' standing in the industry. The Tribunal upheld the duty demand based on the amended notification, dismissing the appeal on this issue.

Issue 2: Allegations of deliberate evasion of duty and concealment of facts
The department alleged deliberate evasion of duty and concealment of facts, leading to a duty demand of &8377; 65,817.63 and a penalty of &8377; 5 lakhs imposed by the Collector of Central Excise. The Board upheld the duty demand and confirmed the penalty, although reducing it to &8377; 1.5 lakhs. The appellants contended that they lacked mala fide intent and were genuinely unaware of the amendment. The Tribunal, however, found the appellants' conduct to amount to clandestine removals, considering their failure to disclose complete information to the authorities. Rule 9(2) was invoked, and the duty demand was upheld, while the penalty was reduced to match the duty amount.

Issue 3: Imposition of penalty and confiscation of goods
The Tribunal acknowledged the imposition of penalty as justified but deemed the penalty amount disproportionate to the duty liability. While finding the appellants' lack of mens rea unconvincing, the Tribunal reduced the penalty to &8377; 65,817.63, aligning it with the duty amount. The Tribunal allowed the appeal partially on the penalty aspect, reducing the penalty amount accordingly.

In conclusion, the Tribunal upheld the duty demand based on the amended notification, dismissed the appeal on the duty liability issue, and reduced the penalty amount to match the duty liability, considering the lack of mens rea and proportionality. The confiscation of goods and imposition of redemption fine were not challenged, making them concluded issues.