2010 (10) TMI 174 - AT - Central Excise

Penalty storage outside factory without permission - permission was denied in the month of April, 1997 and the seizure was made in respect of the scrap even outside the factory on 6-5-1997 - goods were seized outside factory but in the adjudication order the adjudicating authority has not confiscated the same - scrap which was seized outside factory was duly entered in the records of the plant lot-wise - Appellant asked for permission to store the scrap outside the factory without payment of duty and earlier to the seizure also Appellant following the same procedure and it was in the knowledge of the Revenue that the scrap was sold in auctions from the township store on payment of appropriate duty therefore allegation of suppression with intent to evade payment of duty, not sustainable Penalty storage outside factory without permission - excisable goods removed in contravention of any provision of the Rules - imposition of penalty under this provision of Rule 173Q of Central Excise Rules mens rea not required therefore as Appellant removed the scrap in question from the factory without payment of duty which was specifically auctioned and appropriate duty has been paid Appellants are liable for penalty under Rule 173Q of Central Excise Rules

Summary

Issues:
Challenge against demand of duty and penalties under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules.

Analysis:
The Appellant contested the penalties imposed, arguing that there was no intention to evade duty payment. They had sought permission to store scrap outside the factory and pay duty at auction, but permission was denied after the scrap was seized. The seized scrap was recorded in their plant records, indicating no intent to evade duty. The Tribunal found the allegation of suppression unsustainable, setting aside the penalty under Section 11AC of the Central Excise Act.

Regarding the penalty under Rule 173Q, the Tribunal upheld it as the Appellant had removed scrap from the factory without duty payment, even though duty was paid upon auction. Mens rea was not required for penalty under this rule, leading to the affirmation of the penalty under Rule 173Q of the Central Excise Rules.

In conclusion, the appeal was disposed of with the penalty under Section 11AC being set aside, while the penalty under Rule 173Q was upheld.