2000 (7) TMI 128 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 209-A without invoking it in the show cause notice.

Analysis:
The case involved an appeal against the imposition of a penalty of Rs. 1 lakh under Rule 209-A of the Central Excise Rules, 1944 by the Collector of Central Excise, Rajkot. The appellants, M/s. Kinotone and M/s. International Talkie Equipment Company Ltd., were accused of incorrectly availing full exemption under certain SSI notifications by declaring themselves as independent manufacturers of parts of Cinema projector equipments. The Adjudicating Authority confirmed the duty demand against M/s. Kinotone, stating that they were the sole manufacturer of the goods in question. However, the Collector imposed a penalty under Rule 209-A on the appellant, alleging their involvement in the clandestine removal of Cinema projectors and their association with other entities. The appellant challenged this penalty, arguing that Rule 209-A was not invoked in the show cause notice.

The appellant's representative contended that the penalty under Rule 209-A could not be sustained as it was not mentioned in the show cause notice, which only proposed penal action under Rule 173-Q. The Department's representative opposed this argument, stating that citing a wrong provision did not invalidate the penalty since the appellant had the opportunity to defend against it. The Tribunal considered both arguments and reviewed the evidence presented in the case.

The Tribunal found that the show cause notice alleged M/s. Kinotone's involvement in the manufacture and clandestine removal of Cinema projectors, calling upon them and the appellant to show cause against the levy of excise duty. The Adjudicating Authority had shifted the charge from the notice to the appellant, holding them responsible for possessing or dealing with excisable goods liable for confiscation. While the Authority relied on a previous Tribunal decision to support this finding, the Tribunal disagreed with this approach.

The Tribunal distinguished the present case from the decision cited by the Collector, emphasizing the different circumstances governed by Rule 173-Q and Rule 209-A. It held that the appellant should have been given an opportunity to defend against penalty specifically under Rule 209-A, which was not provided. The Tribunal also addressed other legal precedents cited by the Department, clarifying that mere mention of a wrong provision of law did not justify imposing a penalty under a different provision. Consequently, the Tribunal set aside the penalty imposed on the appellants, allowing their appeal.