2013 (10) TMI 1246 - AT - Central Excise

Show Cause Notice issued to whom Held that - The show-cause-notice dated 29.07.1999 issued to M/s. Western Electrical company also indicates that the Western Transformers and two other persons as co notices, there is no doubt as the fact that extended period was invokable in this case as there was suppression of the facts. Penalty under Rule 173Q of Central Excise Rule 1994 - Held that - Penalty under Rule 173 Q (i) of the Central Excise Rules 1944, can be invoked if and when the ingredients are present which are so in the case - Penalty of Rs. One Lakh is disproportionate, and ends of justice will be met if such penalty is reduced to Rs. 10,000 as there is no doubt that appellant has not maintained statutory records properly Penalty imposed under Rule 173 Q (i) of the Central Excise Rules, 1944 is reduced to Rs. 10,000/- from Rs. 1 lakh. Penalty u/s 11AC of Central Excise Act 1944 Held that - The period from April-1994 to 27.09.1996 will not be covered under the provisions of section 11AC of the Central Excise Act, 1944 for imposition of penalties - the provisions was brought into statute only on 28.09.1996, to that extent, the claim of for not imposition of equivalent penalty for the demand of the duty from April-1994 to 28.09.1996 is valid - Penalty equivalent to the amount of duty payable from April-1994 to 28.09.1996 set aside. Penalty u/s 11AC of Central Excise Act 1944 For the period from 28.09.1996 to March-1998 Held that - The appellant had admitted removal of goods by availing ineligible benefit, and not contested the duty liability - Penalty imposed u/s 11AC for the demand of duty on 28.09.1996 to March March-1998 upheld - The amount of duty liability has already been discharged and hence the appellant are eligible to get the benefit of the reduced amount of penalty of 25% of the amount of duty liability - The penalty imposed u/s 11AC of the Central Excise Act, 1944 for the period 28.09.1996 to March-1998 the benefit of section 11AC extended the appellant directed to pay the penalty @ of 25% of the amount of duty for this period Interest Liability u/s 11AB of the Central Excise Act, 1994 Held that - The interest liability need to be worked out for the period post 28.09.1996 till March-1998 - The provision of section 11AB was brought into statute w.e.f. 28.09.1996 - The lower authorities will calculate the interest to be paid by the appellant on an amount of duty liability for the period 28.09.1996 to March 1999 - the appellant is not required to discharge any interest on the amount of duty for the period April-1994 to 28.09.1996 Decided partly in favour of Assessee.

Summary

Issues:
1. Imposition of penalties under section 11AC.
2. Validity of second show-cause notice invoking extended period.
3. Penalty imposed under Rule 173 Q of the Central Excise Rules.
4. Quantum of penalty under section 11AC for different periods.
5. Interest liability under section 11AB of the Central Excise Act.

Analysis:
1. The appeal challenged the penalties imposed under section 11AC of the Central Excise Act, 1994. The appellant contended that the second show-cause notice invoking the extended period was unsustainable. The Tribunal found that the second notice was valid due to suppression of facts, rejecting the appellant's argument. The penalty under section 11AC for the period from April 1994 to 28.09.1996 was set aside as the provision was not applicable before 28.09.1996. However, for the period from 28.09.1996 to March 1998, the penalty was upheld as the appellant had admitted the removal of goods without contesting the duty liability.

2. The validity of the second show-cause notice was a crucial issue. The appellant argued that the second notice issued on 28.07.1999 was invalid as a notice dated 16.02.1999 had already been issued. The Tribunal disagreed, stating that the second notice was justifiable due to the involvement of multiple entities and suppression of facts. The appellant's reliance on legal precedents was rejected, and the Tribunal upheld the imposition of penalties under section 11AC for the relevant period.

3. The penalty imposed under Rule 173 Q of the Central Excise Rules was also contested. The appellant argued that this penalty could not be sustained alongside the penalty under section 11AC. The Tribunal agreed that a penalty of Rs. 1 lakh was disproportionate and reduced it to Rs. 10,000, considering the appellant's failure to maintain proper statutory records.

4. Regarding the quantum of penalty under section 11AC for different periods, the Tribunal differentiated between the period before and after 28.09.1996. The penalty for the period before the enactment of the provision was set aside, while the penalty for the subsequent period was upheld based on the appellant's admission of wrongdoing.

5. The interest liability under section 11AB of the Central Excise Act was also addressed. The Tribunal directed the calculation of interest for the period post-28.09.1996 till March 1998, with the appellant required to discharge the interest within 30 days of being informed. The appellant was relieved from paying interest for the period before 28.09.1996.

In conclusion, the Tribunal disposed of the appeal by setting aside penalties for the pre-28.09.1996 period, reducing the penalty under Rule 173 Q, upholding penalties under section 11AC for the relevant period, and directing the calculation and payment of interest as per the provisions of the Central Excise Act.