2011 (7) TMI 915 - AT - Central Excise

Penalty - Rule 173Q(1) on the ground that they had contravened certain provisions of the Central Excise Rules, 1944 - it appears that the differential amount of duty was paid by the assessee after a visit of preventive officers of the department to the factory - the assessment done by the appellant at the time of clearance of the goods was not provisional assessment as contemplated under Rule 9B. At best, it was a self-assessment under Rule 6(b) - the assessable value determined at the time of clearance of the goods and the duty paid at that time were lower than the correct assessable value required under Rule 173C and the correct amount of duty required under Rule 173F respectively. - Thus the contravention of Rules 173C and 173F is indisputable in this case. Whether a contravention of the above kind would attract Rule 173Q(1) - As rightly pointed out by the learned counsel, the show-cause notice did not allege that the assessee had contravened any Rule with intent to evade payment of duty - the appellant cannot be allowed to say that the penalty should be set aside on the ground that any particular clause of Rule 173Q(1) was not specifically invoked in the show-cause notice - The offence is purely one of contravention of certain provisions of the Central Excise Rules without mens rea. This situation would call for redetermination of the quantum of penalty. In this connection, we have noted that the maximum penalty prescribed under Rule 173Q at the relevant time was three times the value of the goods and the minimum penalty prescribed was Rs.5,000/-. We are of the view that the minimum penalty would suffice the purpose of this case on the facts and circumstances which we have noted. In the result, the quantum of penalty stands reduced to Rs.5,000/-.

Summary

Issues:
Appeal against penalty imposed under Rule 173Q(1) for contravention of Central Excise Rules and determination of assessable value. Examination of whether penalty could be deducted from rebate sanctioned. Allegation of contravention without intent to evade payment of duty. Applicability of specific clauses of Rule 173Q(1) in the show-cause notice.

Analysis:
The appeals were filed against a common order passed by the Commissioner (Appeals) concerning penalty imposition under Rule 173Q(1) for contravention of Central Excise Rules and determination of assessable value. The lower appellate authority upheld the penalty but limited it to Rs.10 lakhs without examining if the penalty could be deducted from the rebate sanctioned. The appellant argued that the assessable value was determined correctly based on available information and no deliberate violation occurred. The respondent contended that the appellant should have resorted to provisional assessment under Rule 9B. The original authority imposed a penalty, which was reduced by the appellate authority. The appellant argued that the penalty proposal was not sustainable as specific clauses of Rule 173Q(1) were not invoked in the show-cause notice. The Tribunal found that the contravention of Rules 173C and 173F occurred without intent to evade payment of duty, reducing the penalty to Rs.5,000.

The Tribunal noted that the appellant did not take steps for provisional assessment under Rule 9B and paid short-duty due to incorrect assessable value determination. The contravention of Rules 173C and 173F was evident. The Tribunal analyzed the applicability of Rule 173Q(1) clauses and found that the penalty was reduced to Rs.5,000 for contravention without mens rea. The show-cause notice invoked Rule 173Q(1) for contravention of Central Excise Rules. The Tribunal held that the penalty was justified based on the allegations in the notice. The appeal against the deduction of penalty from rebate sanctioned was allowed as no provision authorized such deduction.

In conclusion, the Tribunal partially allowed one appeal by reducing the penalty to Rs.5,000 and allowed another appeal against the deduction of penalty from the rebate sanctioned. The judgment focused on the contravention of Central Excise Rules, determination of assessable value, and the applicability of specific clauses of Rule 173Q(1) in the penalty imposition process.