2001 (9) TMI 172 - AT - Central Excise

Summary

Issues:
Imposition of penalties under Central Excise Rules for contravention of AR-4 procedure during exportation without executing bond or following procedures.

Detailed Analysis:
The appeal arose from penalties imposed by the Commissioner of Central Excise on the appellants for contravening Central Excise Rules by exporting final products without executing bond or following AR-4 procedure under Rule 13. The Customs Authorities sought to demand excise duty and impose penalties, leading to show cause notices and subsequent adjudication by the Commissioner. The Tribunal had earlier set aside the Commissioner's orders and remanded the matter for fresh adjudication. The Commissioner's de novo proceedings resulted in two orders, which were challenged in the present appeals.

As per the impugned orders, the appellants were not required to pay duty on the exported goods but were directed to pay penalties of Rs. 25,000/- and Rs. 1,25,000/- in different cases. The appellants argued that they had followed the procedure outlined in Circular No. 212/46/96 C. Ex. dated 20-5-96, meant for Small Scale Manufacturers availing full exemption, and thus did not contravene the AR-4 procedure. The Commissioner, however, contended that the relaxed procedure in the circular applied only to manufacturers lacking infrastructure and manpower, excluding the present appellants from its scope.

The Tribunal analyzed the circular and found that the appellants fell within the category of manufacturers specified in the circular, thus concluding that the relaxed procedure had been adhered to by the appellants. Consequently, the Tribunal held that the finding of contravention of the AR-4 procedure by the Commissioner could not be sustained, leading to the setting aside of the imposed penalties.

Moreover, the Tribunal referenced various judgments, including GCT Industries Ltd. v. CCE, Hyderabad, LML. Ltd., v. CCE, New Delhi, and Salzer Controls Ltd. & Others v. CCE, Chennai, to establish that when a demand for duty is set aside, no penalty is imposable. Following this legal precedent, the Tribunal determined that no penalty was liable to be imposed in the instant case since the duty demand was set aside by the adjudicating authority. Consequently, the Tribunal set aside the impugned orders and allowed the appeals.