2010 (8) TMI 230 - AT - Central Excise

Penalty - shift manufacturing premises from one place to another non-compliance of direction of Superintendent - not indicated the competent authority to whom the assessee should apply for direction - nature of formality to be complied has also not been intimated - show cause notice did not indicate which specific directions - submission that the respondents deliberately intended to evade the excise duty by shifting the manufacturing premises, not acceptable - provisions of Section 11AC, not applicable - Appeal is rejected

Summary

Issues:
Department's appeal against reduction of penalty by Commissioner (Appeals) from Rs. 2,94,919 to Rs. 1 lakh.

Analysis:
The case involved an appeal by the department against the reduction of penalty by the Commissioner (Appeals) from Rs. 2,94,919 to Rs. 1 lakh. The respondent, a manufacturer of refrigerator parts, had informed the jurisdictional Superintendent about shifting their manufacturing premises. The Superintendent acknowledged the letter and advised compliance with the law for shifting. The department alleged violations of Central Excise Rules during the shifting process and imposed a penalty of Rs. 2,94,919 along with a demand. The Commissioner (Appeals) reduced the penalty to Rs. 1 lakh, leading to the department's appeal for enhancement back to the original amount.

During the proceedings, the department argued that the respondent willfully failed to comply with the Superintendent's directions, seeking a penalty equal to the duty involved. On the other hand, the respondent's advocate contended that the premises were shifted after due intimation to the authorities, with no intention to evade duty. The advocate highlighted that any violations were technical and not deliberate attempts to avoid duty payment.

The Tribunal carefully examined the submissions and records. It noted that the directions given by the Superintendent were vague, lacking specifics on the competent authority or formalities to be followed. The show cause notice did not specify the alleged non-compliance by the respondent. The Tribunal found that penal action under Section 11AC was not warranted for failure to follow directions but only for violations of the Act and Rules. It was observed that there was no evidence of deliberate evasion of excise duty during the premises shift. The Tribunal also considered that the new premises were subsequently registered and regularized. Consequently, the Tribunal deemed the reduction of penalty by the Commissioner (Appeals) to Rs. 1 lakh as reasonable and found no merit in the department's appeal, ultimately rejecting it.