2011 (4) TMI 795 - AT - Central Excise

Penalty u/s 11AC - Valuation u/s 4 or u/s 4A - Product Baygon All Insect Killer and Baygon Flying Insect Specialist - Held that - The issue stand decided against assessee in their own case M/s Aero Industries Vs. CCE Vapi 2004 (6) TMI 13 - CESTAT MUMBAI wherein held that the said products are classifiable to pay duty u/s 4A - Hence the Tribunal while confirming duty has observed that the assessee being a SSI can be granted benefit of interpretation of classification and Section 11AC is not invocable - However the violation of the rules has been upheld inasmuch as the correct duty was not arrived at and paid thus calling for penalty under Rule 173Q(1) (erstwhile) - As such the Tribunal has set aside the penalty 11AC but imposed penalty under Rule 173Q(1). Thus laying down that the provisions of Section 11AC are not attracted. As such reduce the penalty imposed upon the appellant to Rs.25, 000/- in terms of Rule 25 of Central Excise Rules 2002. Separate penalties of Rs.25, 000/- and Rs.15, 000/- imposed upon Shri Bhogilal L. Patel Proprietor and Shri Shankarbhai J. Patel Manager cum Authorised Signatory respectively imposed under Rule 26 of Central Excise Rules 2002 are set aside.

Summary

Issues:
1. Classification of the product for duty payment under Central Excise Act, 1944.
2. Imposition of penalty under Section 11AC and Rule 25 of Central Excise Rules, 2002.
3. Applicability of penalty under Rule 173Q(1) (erstwhile) in the case.
4. Interpretation of law regarding penalty imposition on individuals.

Analysis:

Issue 1:
The dispute in the appeal concerns the classification of the appellant's product Baygon All Insect Killer and Baygon Flying Insect Specialist under Chapter Sub Heading No.3808.10 for duty payment. The Revenue argued that the products are mosquito repellants, necessitating duty payment under Notification No.13/2002-CE(NT) in accordance with Section 4A of the Central Excise Act, 1944. Consequently, duty and penalty were confirmed against the appellant.

Issue 2:
The advocate for the appellant acknowledged a previous decision against them, agreeing with the classification for duty payment under Section 4A. However, it was contended that as an SSI, benefit of interpretation of classification should be granted, and Section 11AC penalty should not be applicable. The Tribunal upheld the violation of rules but set aside the penalty under Section 11AC, imposing it under Rule 173Q(1) instead.

Issue 3:
The Revenue argued for the imposition of a penalty under Rule 25 based on a previous decision regarding the penalty under erstwhile Rule 173Q. After considering both sides' submissions, the Tribunal confirmed the duty amount and the confiscation of goods with redemption fine, which were not contested by the appellant.

Issue 4:
Regarding penalties, the Tribunal referred to its earlier decision in the same appellant's case, stating that Section 11AC penalties were not applicable. Consequently, the imposed penalty was reduced to Rs.25,000 under Rule 25 of the Central Excise Rules, 2002. Penalties on individuals were set aside as the issue involved interpretation of law.

In conclusion, all three appeals were disposed of with the duty amount confirmed, penalties reduced, and penalties on individuals set aside based on the Tribunal's interpretation and application of relevant rules and provisions.