2012 (6) TMI 610 - AT - Central Excise

Penalty imposed under Rule 25(1)(b) revenue stand that appellant has knowingly received goods which did not suffer of central excise duty and did not account for the same even though he was a registered dealer Held that - In the absence of any evidence to show that cenvat credit has been passed on in respect of these goods and there was an intention to pass on cenvat credit, merely because the appellant received the goods which were not duty paid, imposition of such harsh penalty is not justifiable - the submission of appellant that no proceedings were initiated against the manufacturer also would provoke for a lenient view as regards penalty - as no allegations of improper maintenance of accounts or improper passing on cenvat credit against the appellant who is a registered dealer the penalty imposed equal to the duty is very harsh and is reduced to Rs 10,000.

Summary

Issues:
1. Imposition of penalty under Rule 25(1)(b) on the appellant for not accounting for TMT bars received.
2. Consideration of whether the penalty imposed is justifiable given the circumstances of the case.

Analysis:
1. The judgment deals with the imposition of a penalty on the appellant, a registered dealer, for not accounting for TMT bars received from a manufacturer without payment of duty and without the cover of a central excise invoice. The penalty was imposed under Rule 25(1)(b) on the grounds that the appellant knowingly received goods that were not duty paid and failed to reflect the material received in any of their accounts. The appellant argued that the offence was minor, no intention to pass on cenvat credit existed, and there was proper accountal for other goods. The appellant also highlighted that the supplier of the goods accepted liability and discharged the duty, with no further proceedings initiated against the manufacturer. The judge noted the absence of evidence showing cenvat credit passing and the lack of intention to pass on such credit. Additionally, no allegations of improper account maintenance or improper passing on of cenvat credit were made against the appellant.

2. After considering the submissions and circumstances of the case, the judge found the penalty equal to the duty imposed on the appellant to be excessively harsh. The judge acknowledged that no proceedings were initiated against the manufacturer and that penalties on other issues for the appellant had been dropped. Given these factors and the absence of allegations regarding improper account maintenance or cenvat credit passing, the judge deemed a lenient view appropriate. Consequently, the penalty was reduced from Rs.1,30,275/- to Rs.10,000/-, and the appeal was disposed of accordingly. The judge emphasized the need for a balanced approach in determining penalties, especially when considering the specific circumstances and evidence presented in each case.