2011 (4) TMI 366 - AT - Central Excise

Penalty under Rule 25 - Registration under Rule 12(B)- The Appellant had sent some yarn bought by him from the market for doubling to a factory without taking registration under Rule 12(B). He did not pay the duty on such manufacturing processes. Therefore, Show Cause Notice demanding excise duty from the Appellant with interest and with proposal for imposing penalty under Rule 25 of the Central Excise Rules 2002 read with Section 11AC was issued to the Appellant - Held that - the Appellant is a party with limited means and no manufacturing facility of his own - Further, the Rule 12(B) itself has been repealed and there is no chance of some type of offence being committed again - Thus, reduce the penalty to Rs.20,000/- The appeal is disposed accordingly.

Summary

Issues:
1. Interpretation of Rule 12(B) of Central Excise Rules, 2002.
2. Liability of a person sending raw materials to job workers for manufacture.
3. Imposition of penalty under Rule 25 of Central Excise Rules 2002.
4. Discretion of the Tribunal to reduce penalty imposed.

Analysis:
1. The case involved the interpretation of Rule 12(B) of the Central Excise Rules, 2002, applicable to products falling under specific chapters. The rule mandated registration, maintenance of accounts, payment of duty, and compliance with relevant provisions for persons sending raw materials for manufacturing on job work. The rule also provided options for job workers to undertake responsibilities on behalf of the person sending materials.

2. The Appellant in this case sent yarn for doubling to a factory without obtaining registration under Rule 12(B) and failed to pay the duty on the manufacturing process. Consequently, a Show Cause Notice was issued, demanding excise duty, interest, and proposing a penalty under Rule 25 of the Central Excise Rules 2002. The proceedings resulted in confirming duty demand and imposing a penalty, leading the Appellant to appeal against the penalty.

3. During the proceedings, the Appellant was not represented on several occasions. However, a telegram was later received from the Appellant requesting a decision based on written submissions. The Tribunal considered this communication in the case.

4. Upon review, the Tribunal noted that the penalty imposed was equal to the duty evaded, although there was no strict requirement for such equivalence. Considering the Appellant's limited means and lack of manufacturing facility, along with the repeal of Rule 12(B), the Tribunal exercised discretion and reduced the penalty from the original amount to Rs. 20,000, taking into account the circumstances of the case.

5. The Tribunal disposed of the appeal based on the revised penalty amount, concluding the case with the adjusted penalty terms.

This comprehensive analysis of the judgment addresses the issues related to the interpretation of the rules, liability for non-compliance, penalty imposition, and the Tribunal's discretionary powers in reducing penalties based on the specific circumstances of the case.