2004 (9) TMI 648 - AT - Central Excise

Summary

Issues:
Penalty imposition under Section 11AC of the Central Excise Act, 1944 and various Rules of the Central Excise Rules when duty is paid before the issuance of Show Cause Notice.

Analysis:
The appeal challenged the Order-in-Appeal that upheld the penalty imposed under Section 11AC of the Central Excise Act, 1944 and under Rules 9(2), 52A, 173Q, and 226 of the Central Excise Rules, 1944, albeit reduced from Rs. 1,42,188 to Rs. 40,000. The appellant's representative cited relevant judgments, including a Supreme Court decision and Tribunal rulings, establishing that penalty cannot be imposed if duty is paid before the Show Cause Notice is issued. The consultant argued that this issue had been settled by legal precedents. The Tribunal considered the submissions and found that it is well-established that penalties under Section 11AC and various Rules of the Central Excise Act cannot be imposed if duty has been paid before the Show Cause Notice is issued. In this case, the duty was paid before the Notice was served, leading to the penalty being set aside. The Tribunal relied on previous judgments and allowed the appeal, ordering the penalty of Rs. 40,000 to be annulled.

This comprehensive analysis of the judgment highlights the legal arguments, precedents cited, and the Tribunal's decision based on established legal principles regarding penalty imposition under the Central Excise Act and Rules when duty payment precedes the issuance of a Show Cause Notice.