2000 (9) TMI 135 - AT - Central Excise

Summary

Issues:
1. Duty evasion and penalty imposition on processors of man-made fabrics for discrepancies in assessable value.
2. Appeal against the order of the Commissioner (Appeals) setting aside penalties.
3. Interpretation of Section 11AC of the Central Excise Act, 1944 regarding penalty imposition.
4. Comparison of different Tribunal decisions on similar grounds.

Analysis:
1. The case involves processors of man-made fabrics who processed fabrics for merchant manufacturers on a job work basis. Central Excise Officers found discrepancies in the assessable value declared in invoices compared to declarations filed by traders under Notification No. 27/92-(N.T.). Penalties were imposed by the Deputy Commissioner under Rule 173Q and Section 11AC of the Central Excise Act, 1944.

2. The appellants appealed to the Commissioner (Appeals) who set aside the penalties. The Commissioner observed that job workers were not responsible for verifying prices declared by traders and relied on a Tribunal decision in a similar case where no fraud or suppression was established. The Revenue appealed this decision.

3. The Revenue contended that job workers were liable for duty and penalties due to misdeclaration or suppression of facts. They argued that under Section 11AC, imposing a penalty equal to the duty determined was mandatory. The Respondents' Advocate cited Tribunal decisions where penalties were dismissed when traders, not job workers, were responsible for discrepancies.

4. The Tribunal noted that job workers cannot be penalized for traders' misdeeds. If job workers rectify duty differences upon learning actual prices, they should not be penalized for traders' errors. Citing previous decisions, the Tribunal dismissed the appeal as lacking merit based on consistent interpretations of similar cases.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision to set aside penalties imposed on the processors of man-made fabrics, emphasizing that job workers cannot be held accountable for traders' misdeclarations. The Tribunal's decision was based on the consistent interpretation of similar cases where penalties were dismissed when job workers rectified duty discrepancies caused by traders.