2023 (1) TMI 591 - AT - Central Excise

Quantification of penalties - levy of composite penalties under Section 11 AC of the Central Excise Act, 1944 read with 173 Q of the Central Excise Rules, 1944 - Clandestine removal - hank yarn - HELD THAT - Reliance placed in the case of PUNJAB RECORDER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2001 (5) TMI 86 - CEGAT, COURT NO. IV, NEW DELHI - the facts in the of Punjab Recorders are significantly different. In the said case the period in dispute was 20.03.1992 to 13.07.1995. Section 11 AC came into statute book with effect from 28.09.1996 i.e. after the disputed period. In this circumstance it was held that no penalty could have been imposed under section 11 AC. In this back ground it was held that since joint penalty under section 11 AC and Rule 173 Q has been imposed and penalty under section 11 AC could not have been imposed therefore, joint imposition of penalties under section 11 AC read with Rule 173 Q could not be sustain - In the instant case the period involved is both before the introduction of section 11 AC after introduction of section 11 AC in the statute book. Therefore, the facts in the present case are different from the facts in the case relied upon by the appellant. In the case of COLLECTOR OF CUSTOMS VERSUS TELEVISION COMPONENTS LTD. 2000 (2) TMI 90 - SUPREME COURT also the matter was remanded to the lower authorities because the joint penalty for 2 offences was imposed and in the final order only one offence was upheld. Thus the facts in the case of Television Components Ltd are also different. There are no error in imposition of composite penalty under Rule 173 Q read with Section 11 AC as in the instant case all the charges have been confirmed and the charges pertains to both the period prior to introduction of Section 11 AC and thereafter. Therefore, penalty under both the provision could have been rightly imposed. In view of the above, I do not find any merit in the appeals filed by the Appellant. Appeal dismissed.

Summary

Issues:
Appeal against demand of central excise duty & imposition of penalty.

Analysis:
The appellants, engaged in yarn manufacturing, faced a demand for excise duty and penalties after a visit by Central Excise Officers resulted in the seizure of yarn and accounts records. The initial Show Cause Notice (SCN) proposed confiscation of seized yarn, excise duty recovery, and penalties on the company and an individual. The Tribunal remanded the matter for fresh adjudication due to the Adjudicating Authority's oversight of the appellant's submissions. Upon re-adjudication, a higher demand of excise duty and penalties was confirmed, leading to a subsequent challenge by the appellant. The Tribunal's final order reduced the demand, dropping certain charges related to goods cleared with and without payment of duty, while confirming others. The penalties were remanded for requantification. The Adjudicating Authority then imposed penalties under various sections, leading to the present appeals against the penalties.

The appellant's counsel argued that penalties under Section 11AC and Rule 173Q cannot be imposed jointly, citing a Tribunal decision. The counsel emphasized that interest under Section 11AB can only be demanded post its introduction in 1996. Another Tribunal decision was referenced to support the argument. The Adjudicating Authority had imposed penalties under Section 11AC and Rule 173Q, which the appellant contended as unsustainable jointly.

The Tribunal's previous order had settled the duty demand issue, leaving the penalties' quantification for the impugned order. The appellant's reliance on a specific case was noted, which emphasized the need for separate penalty considerations. The Tribunal's directive for the Adjudicating Authority to decide penalties in light of confirmed duty was highlighted. A Supreme Court case was referenced to explain the need for proper penalty apportionment in cases of multiple violations. The judgment differentiated the present case from the cited case where penalties under Section 11AC were deemed inapplicable due to the timeline. The Tribunal found no error in the imposition of composite penalties considering charges pre and post Section 11AC introduction, dismissing the appeals.

In conclusion, the Tribunal upheld the imposition of composite penalties under Rule 173Q read with Section 11AC, given the confirmed charges spanning periods before and after the statutory amendment. The dismissal of the appeals was pronounced in open court on 12.01.2023.