2017 (1) TMI 226 - AT - Central Excise

Faulty show cause notice - Confiscation - Redemption fine - Personal penalty - Held that - It can be seen that the various infractions pointed out above, had resulted in evasion of duty. However, since there was no demand raised in the show-cause notice, the same should not be confirmed. I find that Rule 25 of the Central Excise Rules does not require, demand of duty as pre-condition for imposition of penalty. All that the rule prescribes is that the penalty can not exceed the duty on the excisable goods in respect of which any contradiction of the specified nature has been done. The fact regarding contravention and consequential voluntary deposit has not been contested. In the instant case, the demand has not been raised due to faulty drafting, and not because there is no contravention of the specified provisions - Appeal partly allowed.

Summary

Issues:
1. Appropriation of Central Excise duty already paid and imposition of personal penalty.
2. Confiscation of seized material and redemption fine.
3. Demand of duty and penalty under Rule 25 of Central Excise Rules.

Analysis:
1. The case involved a show-cause notice issued to M/s Classic Bakers Pvt. Ltd. seeking appropriation of Central Excise duty already paid and imposition of a personal penalty. The original adjudicating authority confirmed the notice, confiscated seized material, and offered redemption on payment of a fine. The Commissioner (Appeals) observed discrepancies in the demand amount specified in the notice, setting aside a portion of the demand. The penalty was imposed for non-payment of duty and overdrawal in PLA, indicating an intention to evade payment. The penalty was upheld due to the contravention of Rule 8 and efforts to suppress information, despite the demand discrepancies in the notice.

2. The Commissioner (Appeals) dropped a part of the demand as the show-cause notice did not explicitly demand the duty but sought appropriation of amounts already paid. The final order confirmed dropping the demand based on this ground, including the balance amount paid for specific clearances. The confiscation and penalty were addressed under Rule 25 of the Central Excise Rules, which allows penalties for contraventions leading to duty evasion. Despite the absence of a specific demand in the notice, the penalty was sustained due to the contraventions and voluntary deposits made by the appellant.

3. Rule 25 of the Central Excise Rules outlines provisions for confiscation and penalties for violations related to excisable goods. The rule does not mandate a demand of duty as a prerequisite for imposing penalties. It specifies that penalties should not exceed the duty amount related to contraventions committed. In this case, the penalty was justified based on the infractions identified, even though the demand discrepancies in the notice led to a partial dropping of the demand. The penalty was sustained due to the contraventions established, despite the procedural errors in the notice.

The judgment partly allowed the appeal, acknowledging the discrepancies in the demand raised in the show-cause notice but upholding the penalty under Rule 25 of the Central Excise Rules for the contraventions identified.