2013 (12) TMI 1460 - HC - Central Excise

Undervaluation of goods - Whether penalty can be imposed or not under Rule 173Q of the Central Excise Rules, 1944 when the assessees accepted the violations mentioned in the show cause notice and paid the differential duty amount - Held that - Even though a lengthy show cause notice has been given by the appellant on 28-6-1996, no specific provision is mentioned which enables the Department to get penalty. But, on the other hand, it has been simply stated Rule 173Q of the Central Excise Rules, 1944 and it is not at all sufficient for coming to a conclusion that the Department has quoted opt provision of law so as to sustain the claim of penalty. - unless a specific provision of law is quoted in the show cause notice, claim of penalty is not legally maintainable. - Appellate Tribunal, after considering the bereft of particulars in show cause notice with regard to claim of penalty, has rightly rejected the claim of penalty made on the side of the Department and in view of the foregoing enunciation of both the legal and factual aspects, this Court has not found any acceptable force in the contention put forth on the side of the appellant, whereas the contention put forth on the side of the respondent is really having subsisting force and the substantial question of law raised in the present Civil Miscellaneous Appeal is not having substance - Decided against Revenue.

Summary

Issues:
1. Whether penalty can be imposed under Rule 173Q of the Central Excise Rules, 1944 when violations are accepted and differential duty is paid?

Analysis:
The case involves a Civil Miscellaneous Appeal against the Final Order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. The respondent was accused of undervaluing 'V' belts and issued a show cause notice in 1996, demanding Central Excise Duty and penalty. The Order-in-Original accepted the demand, leading to an appeal before the Appellate Tribunal challenging the penalty claim.

The Appellate Tribunal rejected the penalty claim citing the absence of a specific provision enabling penalty imposition in the show cause notice. The appellant argued that Rule 173Q of the Central Excise Rules, 1944 mandates penalty payment, but the Tribunal's decision was erroneous for not considering this provision. The respondent countered, stating that the show cause notice lacked specific penalty provisions, supported by a Supreme Court decision emphasizing the necessity of explicit legal provisions in such notices.

Ultimately, the Court upheld the Tribunal's decision, emphasizing the importance of citing specific legal provisions in show cause notices to support penalty claims. The Court found the appellant's argument lacking merit, dismissed the Civil Miscellaneous Appeal, and upheld the Tribunal's decision to reject the penalty claim due to the absence of explicit penalty provisions in the show cause notice.