2003 (10) TMI 106 - AT - Central Excise

Summary

Issues:
1. Duty liability questioned by the appellants
2. Imposition of penalty on the appellants
3. Applicability of penalty when duty is paid before issuance of show cause notice

Analysis:

Issue 1: Duty liability questioned by the appellants
The appeal was filed against the order-in-appeal passed by the Commissioner (Appeals) where the appellants contested their duty liability and the imposition of a penalty equal to the duty amount. The Anti Evasion Officers found a shortage of uncoated semi Kraft paper during physical verification, which was admitted by the Managing Director of the appellants' firm. The duty amount was debited by the appellants even before the show cause notice was issued. The Member (J) examined the records and upheld the duty liability, stating that the duty was rightly confirmed against the appellants.

Issue 2: Imposition of penalty on the appellants
The appellants argued against the imposition of a penalty equal to the duty amount under Rule 173Q, claiming that they had deposited the duty before the show cause notice was issued. They cited a legal precedent where it was held that penalty cannot be imposed if duty is paid before the notice. However, the Member (J) rejected this argument, noting that the duty was only paid after the Anti-evasion Officers discovered the shortage and the appellants failed to provide a reasonable explanation. The penalty was imposed due to the lack of voluntary payment before detection. Despite reducing the penalty amount to Rs. 30,000 considering the appellants' conduct, the Member (J) maintained the impugned order.

Issue 3: Applicability of penalty when duty is paid before issuance of show cause notice
The Member (J) distinguished the present case from the legal precedent cited by the appellants, emphasizing that the duty payment in this case was not voluntary but made under compulsion after detection by Central Excise Officers. The Member (J) clarified that the penalty was rightly imposed due to the circumstances of the case, even though the duty was eventually paid. The reduction in the penalty amount was based on the appellants' actions and the duty payment, but the imposition of the penalty was deemed appropriate.

In conclusion, the appeal was disposed of with the duty liability upheld and the penalty reduced but maintained, based on the specific circumstances and legal principles applied by the Member (J) of the Appellate Tribunal CESTAT, New Delhi.