2011 (1) TMI 1023 - AT - Central Excise

Penalty under Rule 173Q (1) of Central Excise Act - appellant passed the MODVAT credit without actually selling the goods - Held that - Shortage of inputs found at the premises of GEPL is not of the goods mentioned in the invoices in which the discrepancy was found. Moreover, the investigating authority has not recorded the statement of the person who was the owner of the vehicle mentioned in the invoices in which the discrepancy was found - No penalty can be levied on them for their bonafide act under such clause (bbb) of sub-rule 1 of Rule 173Q, without giving any finding, the adjudicating authority without specifying particular clause of Rule 173Q (1) has imposed the penalty. As decided in Amrit Foods (2005 (10) TMI 96 - SUPREME COURT OF INDIA) neither show-cause notice nor the order of Commissioner has specified which particular clause of Rule 173Q (1) or erstwhile Central Excise Rules, 1944 has been allegedly contravened by the appellant, assessee is to put on notice as to exact nature of contravention for which under provision of Rule 173Q, penalty is imposable - order imposing penalty, is set aside and the appeals are allowed.

Summary

Issues:
Appeal against penalty under Rule 173Q of Central Excise Rules, 1944 imposed on appellants for aiding and abetting contravention by another party.

Detailed Analysis:
1. Facts of the Case:
The appellants were co-noticees in proceedings against a company for duty recovery. They were alleged to have aided in diverting goods by issuing invoices without actual sale to the company. Penalties of Rs.1,00,000/- each were imposed on both appellants.

2. Appellants' Arguments:
The appellants contended that discrepancies in invoices were minor, explained by procedural requirements. They argued that penalties were excessive and not specific under Rule 173Q. They cited relevant legal precedents to support their case.

3. Respondent's Arguments:
The respondent argued that appellants knowingly aided in diverting goods by issuing invoices with discrepancies. They relied on legal precedents to support their position.

4. Tribunal's Findings:
The Tribunal noted discrepancies in invoices but found no evidence linking appellants to diversion of goods. The investigating authority did not verify delivery details, and penalties were imposed without specifying the exact contravention under Rule 173Q.

5. Legal Precedents and Decision:
The Tribunal referenced the requirement for specific contravention details in penalty imposition under Rule 173Q. Citing the apex court's ruling in a similar case, the Tribunal set aside the penalties, following the principle of providing notice of exact contravention for penalty imposition.

6. Conclusion:
The Tribunal ruled in favor of the appellants, setting aside the penalties imposed under Rule 173Q due to lack of specific contravention details. The impugned order was overturned, and the appeals were allowed.

This detailed analysis covers the issues, arguments presented, legal precedents cited, Tribunal's findings, and the final decision in the case involving penalty imposition under Rule 173Q of the Central Excise Rules, 1944.