2006 (9) TMI 197 - HC - Central Excise

Summary

Issues involved: Challenge to penalty imposition by Revenue under Section 11AC of the Central Excise Act, 1944.

Summary:

Issue 1: Allegation of ineligibility for exemption due to brand ownership
The Respondent was alleged to be manufacturing LPG gas stoves under a brand name owned by another entity, leading to a dispute over exemption eligibility for small scale units.

Issue 2: Imposition of duty and penalty
The Respondent paid duty before issuance of show cause notice, but subsequently faced a penalty equal to the duty amount. The Tribunal reduced the penalty to Rs. 40,000, considering the early duty payment.

Judgment:
The High Court upheld the Tribunal's decision, citing Section 11AC of the Central Excise Act, which allows for a penalty of 25% of the duty if paid within 30 days of order communication. As the Respondent paid the duty before assessment and notice issuance, the 100% penalty imposition by the Revenue was deemed unjustified. The penalty of Rs. 40,000, close to 25% of the duty, was found reasonable, leading to the dismissal of the Revenue's challenge.