2012 (11) TMI 240 - AT - Central Excise

Penalty under Rule 96ZQ(5)(ii) of Central Excise Rules - Compounded Levy Scheme for man made fabrics - clandestine removal and delayed payment of duty Held that - Rule 96ZQ(5)(ii) was not invoked in the Show Cause Notice - if the nature of offence and the liability to penalty is explained, mere quoting of a wrong rule does not vitiate the proceedings - Respondents cannot be found fault with, if they presume that they are not being penalized for delayed payment of Excise duty in the month of July 2009, in the absence of proposal for penalty under Rule 96ZQ(5)(ii) - In the absence of specific charge, original adjudicating authority could not have and should not have imposed said penalty - appeal filed by the Revenue is rejected

Summary

Issues:
Penalty under Rule 96ZQ(5)(ii) of Central Excise Rules, 1944 not invoked in Show Cause Notice.

Analysis:
The appellant was operating under the Compounded Levy Scheme for man-made fabrics and faced a case for clandestine removal and delayed duty payment. The dispute in this appeal revolves around the penalty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944. The original adjudicating authority imposed a penalty of Rs. 2,75,000, which was later set aside in the impugned order, leading to the Revenue's appeal.

The Commissioner (Appeals) set aside the penalty based on the ground that Rule 96ZQ(5)(ii) was not mentioned in the Show Cause Notice. The argument presented was that the nature of the offense and liability to penalty being explained, the incorrect citation of a rule does not invalidate the proceedings. However, upon reviewing the Show Cause Notice, it was found that the penalty was proposed under Rule 96ZQ(6) along with Rule 173Q, while the penalty was actually imposed under Rule 96ZQ(6) for non-accounting of goods and clandestine clearance, not for delayed duty payment as per Rule 96ZQ(5)(ii). Since both rules address distinct offenses with separate penalties, it was crucial for both rules to be invoked in the notice. The absence of a specific charge under Rule 96ZQ(5)(ii) led to the setting aside of the penalty imposed under it. Therefore, the decision to uphold the impugned order setting aside the penalty under Rule 96ZQ(5)(ii) was deemed appropriate.

In conclusion, the appeal filed by the Revenue was rejected based on the analysis of the discrepancy in invoking the correct penalty rule in the Show Cause Notice.