2010 (7) TMI 329 - HC - Central Excise

Penalty - allegations leading to non filing of the returns within prescribed period by the respondent - Held that - no allegation in the show cause notice leading to fraud, wilful mis-statement, collusion or suppression of facts or contravention of any of the provisions of the Act or the Rules - to evade payment of duty on the part of the respondent - Mere bald allegations cannot advance the case of Revenue - Appeal is dismissed

Summary

Issues:
1. Whether the Tribunal was justified in setting aside the penalty imposed under Rule 173Q of the Central Excise Rules, 1944?
2. Whether non-disclosure of removal of inputs in the statutory records amounts to suppression of facts under Rule 173Q of the Central Excise Rules, 1944?

Issue 1:
The appellant contended that the Tribunal erred in setting aside the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, despite confirming the findings of the adjudicating authority and Commissioner (Appeals) regarding the invocation of Rule 57-I due to suppression by the assessee to evade duty. The appellant argued that the Tribunal failed to establish necessary allegations leading to the non-filing of returns within the prescribed period by the respondent. It was noted that the show cause notice lacked specific allegations of fraud, wilful misstatement, collusion, or contravention of laws to evade duty. The appellant's reliance on a sentence in the notice alleging mis-utilization of credit on inputs based on suppression of facts was deemed insufficient as it lacked context and supporting evidence. The Court emphasized that mere bald allegations cannot support the case of the Revenue. Ultimately, the Court found that without the essential ingredients of Rule 57-I in the notice, determining suppression of facts by the respondent was not feasible.

Issue 2:
The Tribunal had found that the goods declared obsolete were not removed without duty payment, as duty had been paid upon their removal. This positive finding was crucial in determining the reasonableness of the Tribunal's decision to set aside the penalty. The Court upheld the Tribunal's view, deeming it reasonable and appropriate in the given circumstances of the case. Consequently, the Court concluded that the appeal lacked substance, and the questions were answered against the Revenue. The appeal was dismissed with no order as to costs.

This judgment from the Bombay High Court addressed the issues surrounding the imposition of penalties under Rule 173Q of the Central Excise Rules, 1944, focusing on the Tribunal's decision to set aside the penalty despite allegations of suppression by the appellant. The Court emphasized the importance of specific allegations and supporting evidence in such cases, ultimately upholding the Tribunal's decision based on the factual findings regarding duty payment on goods declared obsolete.