2017 (10) TMI 72 - AT - Central Excise

Penalty u/r 25 of CER, 2002 - non-payment of duty on clearance value - Held that - there is no case of any suppression or clearance of goods without proper maintenance of record. Further, there is no proposal of any confiscation of any goods in the SCN - the elements or the condition precedent for imposing penalty under Rule 25 are not obtaining in the facts of the present case - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Restoration of appeal due to non-appearance of counsel.
2. Eligibility for SSI Exemption Notification.
3. Duty imposition and penalty under Central Excise Act.
4. Reduction of penalty based on mala-fide intentions.
5. Interpretation of Rule 25 of Central Excise Rules, 2002.

Restoration of Appeal:
The appeal was dismissed for non-prosecution due to the absence of the Counsel on record. The appellant explained that they had engaged an advocate who failed to appear on multiple dates. The Tribunal, in the interest of justice, restored the appeal as a new Counsel was present and ready to argue on merits.

Eligibility for SSI Exemption Notification:
The case involved the appellant's clearance of Sulphuric Acid and Fertilizer under specific tariff headings. The appellant claimed exemption under Notification No.8/2003-CE but exceeded the total clearance value limit for the preceding financial year, rendering them ineligible for the exemption. Consequently, a duty amount was alleged to be unpaid, leading to a Show Cause Notice and subsequent Order-in-Original imposing duty, penalty, and interest.

Duty Imposition and Penalty under Central Excise Act:
After an initial round of litigation, the duty was re-quantified on a cum-duty price basis, and penalties were imposed. In the second round, the penalty was reduced by the Commissioner (Appeals) based on the appellant's contention of acting bona fide. The appellant challenged the retention of part of the penalty, arguing against the provisions of Section 11AC and Rule 25 of the Central Excise Rules, 2002.

Reduction of Penalty based on Mala-fide Intentions:
The appellant contended that since there was no mala-fide intention and the issue was interpretational, the retention of part of the penalty was unjust. Citing a previous tribunal ruling, the appellant sought the penalty's complete removal. The Tribunal considered the contentions and ruled in favor of the appellant, setting aside the penalty retained by the Commissioner (Appeals).

Interpretation of Rule 25 of Central Excise Rules, 2002:
Rule 25 of the Central Excise Rules, 2002 provides for penalties under specific circumstances. The Tribunal found that the conditions necessary for imposing penalty under Rule 25 were not present in the case, as there was no suppression or clearance of goods without proper record maintenance. Consequently, the penalty was set aside, and the appeal was allowed with benefits to the appellant. The Restoration of Appeal application was also granted.