2008 (1) TMI 930 - AT - Central Excise

Summary

Issues involved: Duty evasion, penalty imposition, lack of awareness of duty structure, applicability of SSI exemption, duty liability calculation.

Duty Evasion: M/s.ISEX Fashions Pvt.Ltd. cleared rejected garments without paying excise duty. Asst. Commissioner found a balance amount due after the respondent paid a partial sum. The original authority refrained from imposing equal penalty and interest u/s 11AB on the amount already paid by the appellants. A penalty was imposed under Section 11AC and Rule 173Q of the Central Excise Rules, 1944. Commissioner (Appeals) upheld the order.

Penalty Imposition: Revenue argued that penalty should be equal to the total duty not paid since the duty was paid only after detection by departmental officers. Lower authorities were criticized for not imposing penalty equal to the total duty and for not demanding interest on the unpaid amount.

Lack of Awareness of Duty Structure: Respondent claimed to be new to Central Excise during the material period and believed the cleared rejects were eligible for SSI exemption despite bearing another brand name. Original authority and Commissioner (Appeals) accepted the lack of awareness as genuine. Respondent's actual duty liability was considered lower than what was paid.

Duty Liability Calculation: The respondent's belief in exemption led to non-payment of duty on main clearances. The decision of the Larger Bench in Machino Montell (I) Ltd. was followed in not imposing equal penalty and interest on the amount paid before the show-cause notice. No unsettled case law was presented challenging this decision. The impugned order was sustained as the respondent did not appeal, despite paying a higher duty amount due to the original authority's refusal to allow relief u/s 4 (4) (d) (ii) of the Act.

In conclusion, the appeal filed by the Revenue was dismissed as the impugned order did not warrant interference based on the circumstances and findings presented during the case.