2007 (8) TMI 119 - HC - Central Excise

Penalty If duty is deposited before issuance of SCN then penalty is not imposable under Sec. 11AC as well as under Rule 173Q No substantive question of law warranting admission of these appeals arise

Summary

Issues:
1. Challenge to order under Section 35G of the Central Excise Act, 1944.
2. Shortage of steel tubes detected by Central Excise Prevention staff.
3. Imposition of duty and penalty on the assessee.
4. Appeal before Commissioner (Appeals) and subsequent orders.
5. Dismissal of appeal by the Tribunal.
6. Interpretation of Section 11A and 11AC of the Act.
7. Applicability of Division Bench judgment in a similar case.
8. Consideration of legal precedents by the High Court.
9. Dismissal of the appeal by the High Court.

Analysis:
1. The judgment addresses the challenge under Section 35G of the Central Excise Act, 1944, concerning a shortage of steel tubes detected by the Central Excise Prevention staff. The assessee admitted the shortage, leading to the imposition of duty and penalty. The Commissioner (Appeals) set aside the penalty but confirmed the duty amount. The Tribunal upheld this decision, prompting the revenue to appeal.

2. The revenue contended that the Tribunal erred in law by suggesting that issuing a show cause notice under Section 11A post-duty payment was impermissible. Citing a Division Bench judgment, the revenue argued against this view. However, the High Court disagreed, noting the absence of clandestine removal and referencing the Supreme Court's stance in a related case.

3. The High Court highlighted the Commissioner (Appeals)'s finding that duty payment before the notice precluded interest and penalty, citing legal precedents supporting this position. Referring to the Supreme Court's dismissal of a similar appeal, the High Court concluded that no substantial legal question merited the appeal's admission.

4. Ultimately, the High Court dismissed the appeals, emphasizing the established legal principles governing duty payment, penalty imposition, and the necessity of corroborative evidence for clandestine removal allegations. The judgment underscores the significance of prior duty payment in precluding additional penalties, aligning with previous judicial interpretations and dismissing the need for further legal scrutiny.

This comprehensive analysis covers the various issues raised in the judgment, detailing the legal arguments, precedents cited, and the High Court's final decision on the matter.