2008 (8) TMI 270 - AT - Central Excise

Committee of Commissioners decided that appeal be filed against the order in appeal on the point of imposition of penalty - Formal directing a Central Excise officer to file appeal in its behalf was not issued such defect does not go to the root of the matter as the same can be cured post facto by issuance of an authorization at later stage, and therefore, appeal by department cannot be dismissed summarily as not maintainable further, suppression or contravention per se would not justify imposition of penalty unless it was made intentionally in order to evade payment of duty revenue s appeal is dismissed

Summary

Issues:
Non-imposition of penalty on the respondent.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI concerned the non-imposition of a penalty on the respondent by the Commissioner, Customs & Central Excise. The Revenue appealed against the Order-in-Original of the Assistant Commissioner, which had declined to impose a penalty due to the respondent having paid the entire duty prior to the issuance of the show cause notice. The Commissioner based the decision on the Tribunal's Larger Bench ruling in Machino Montel (I) Ltd. and the Supreme Court's affirmation in the case of Rashtriya Ispat Nigam Limited v. CCE. The Revenue contended that the Commissioner erred in not imposing a penalty, citing the shortage of inputs as indicative of clandestine removal under Section 11A(2A) of the Central Excise Act.

Regarding the maintainability of the appeal, the respondent argued that it was not maintainable under Section 35B(2) of the Act as no formal authorization from the Committee of Commissioners was presented. On the merits, the respondent contended that Section 11AC could only be applied in cases of non-payment or short payment of duty due to specific reasons, which were not alleged in the show cause notice. The respondent highlighted that the duty had been paid in full before the notice and referred to the decision in Commissioner of Central Excise, Jalandhar v. S.K. Sacks (P) Ltd., where it was held that no penalty was imposable when duty was paid before the notice.

The President of the Tribunal examined the notings and determined that the Committee of Commissioners had considered the matter and decided to file an appeal against the order-in-appeal for penalty imposition, even though a formal authorization was lacking. On the substantive issue, the President noted the divergence of views on imposing penalties when duty is paid before the show cause notice. However, he emphasized that penalties could be imposed under Section 11AC if there was intent to evade payment of duty. In this case, there was no finding that the non-payment of duty was intentional, and the contravention of provisions may have been unintentional. Considering the meager penalty amount based on the Delhi High Court's ruling, the President concluded that there was no justification for interference with the lower authorities' decisions and dismissed the appeal.