2010 (9) TMI 379 - AT - Central Excise

Quantum of demand and penalty short payment of Rs. 437 which paid in 2003 and interest thereon also paid in 2007 SCN proposing recovery and penalty of total Rs. 20,437 under section 11AC of Central Excise Act, 2004 - Commissioner (Appeals) s order setting aside order of adjudicating authority after discussing non-application of mind by the original authority, upheld

Summary

Issues: Appeal against order of Commissioner (Appeals) for recovery of short payment, imposition of penalties under various rules, review order by Committee of Commissioners, non-application of mind in issuing show cause notice, excessive penalties, irrelevant materials in the order-in-original, filing of appeal by the Department, dismissal of appeal and cross objection.

Analysis:
1. Short Payment and Penalties: The case involved a short payment of Rs. 437/-, which the respondents debited without contest. Subsequently, the Department discovered interest was also payable, leading to a deposit of Rs. 14/- towards interest. The Original Authority imposed penalties totaling Rs. 20,437/-, including penalties under various rules such as Section 11AC of the Central Excise Act, Rule 25 of the Central Excise Rules, and Cenvat Credit Rules.

2. Order of Commissioner (Appeals): On appeal, the Commissioner (Appeals) set aside the Original Authority's order, noting irrelevant materials in the order-in-original related to another case. The Committee of Commissioners reviewed the order and directed the filing of an appeal without specifying the legal basis for their decision.

3. Non-Application of Mind and Excessive Penalties: The Tribunal criticized the Original Authority for issuing a show cause notice in a case where Section 11A(2B) did not warrant it, indicating a lack of application of mind. The penalties imposed were deemed excessive, being 47 times the duty short levied, and the Commissioner (Appeals) also highlighted the non-application of mind by the Original Authority.

4. Review Order and Filing of Appeal: The Tribunal questioned the rationale behind the Committee of Commissioners' decision to order the filing of an appeal, suggesting it may be due to carelessness, fear psychosis, or lack of sense of proportion. The frequency of such appeals involving petty amounts was noted, criticizing the conduct of the Committee for wasting resources and time.

5. Dismissal of Appeal and Cross Objection: Given the insignificant amount in question, the Tribunal rejected the Department's appeal outright and disposed of the cross objection. It was deemed unnecessary to further discuss the merits of the case. The Tribunal also decided to forward a copy of the order to the Chairman, CBEC for review and appropriate action.

In conclusion, the Tribunal found fault with the handling of the case by the statutory authorities, highlighting issues of non-application of mind, excessive penalties, and wastage of resources in pursuing appeals for petty amounts. The dismissal of the appeal and cross objection signaled disapproval of the actions taken, emphasizing the need for more prudent and efficient decision-making processes within the Department.