2008 (9) TMI 251 - AT - Central Excise

Compounded levy scheme breaking of seal of stenter - seal was found to be intact on 7-2-2000 but found broken on 26-4-2000 - Partner admitting having broken the seal on 4-4-2000 without prior permission by Central Excise authorities since there is not evidence that seal actually broken prior to 4-4-2000, seal broken in February itself would be on basis of assumptions and presumptions, demand raised for February and March, 2000 is set aside by extending benefit of doubt further, nothing on record to prove involvement of buyers in breaking of seal, penalty on buyer not imposable

Summary

Issues involved: Determination of duty payment period based on seal breakage, imposition of penalty on the processing unit and recipients of processed fabrics.

Analysis:
1. Duty Payment Period: The case involved a dispute regarding the period for which duty payment was required. The appellant argued that the seal on the stenter machine was broken on 4-4-2000, while the authorities assumed it was broken between 7-2-2000 and 26-4-2000. The tribunal agreed with the appellant, stating that without evidence to prove the seal was broken before 4-4-2000, the demand for duty for February and March 2000 was unjustified. The duty for April 2000 was paid, and the tribunal set aside the duty confirmation for the earlier months based on the benefit of the doubt.

2. Imposition of Penalty: The Revenue imposed penalties on the processing unit and the recipients of the processed fabrics for breaking the seal without authorization. The tribunal acknowledged that the seal was indeed broken by the processing unit, just not within the assumed period. The penalty on the processing unit was reduced significantly from Rs. 15,41,379 to Rs. 1 lakh due to overall considerations. However, the tribunal found no grounds for imposing a separate penalty on the partner of the unit or the buyers of the fabrics. The buyers were not expected to verify duty payments under the compounded levy scheme, leading to the penalties on them being set aside.

3. Final Decision: The tribunal disposed of all appeals by setting aside the duty confirmation for February and March 2000, reducing the penalty on the processing unit, and canceling penalties on the partner of the unit and the buyers of the fabrics. The decision was pronounced in court on 12-9-2008, providing clarity on duty payment periods and penalty imposition in the case.