2003 (12) TMI 116 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act.
2. Role and liability of the company secretary in Central Excise matters.

Analysis:

Issue 1: Imposition of penalty under Section 11AC of the Central Excise Act:

The appellants challenged the penalty imposed under Section 11AC of the Central Excise Act, arguing that since the duty was paid before the issuance of the show cause notice, no penalty should be imposed. The appellants relied on various judgments, including the case of Amritsar Crown Caps (P) Ltd. v. CCE, Chandigarh, and Ashok Leyland Ltd. v. CCE Chennai. They contended that penalties under Section 11AC and Section 11AB should not be imposed in cases where the duty has been paid before the notice. Additionally, they argued that even if a penalty is warranted, it should not be equivalent to the duty amount. The appellants also cited precedents where penalties under Section 11AC were reduced by the Tribunal and High Courts, emphasizing the discretionary power to reduce penalties.

On the other hand, the Revenue argued that penalties should be imposed if suppression is proven, regardless of duty payment before the show cause notice. They relied on judgments such as Tamil Nadu Housing Board v. CCE Madras and Elephanta Gases Ltd. v. CCE, Pune-I to support their stance on imposing penalties even when duty has been paid before the notice.

The Tribunal reviewed the arguments and precedents presented by both parties. It noted its consistent stance in previous cases, such as Ashok Leyland Ltd. v. CCE Chennai and G.K. Steels (CBE) Ltd. v. CCE, Coimbatore, where it held that penalties under Sections 11AB and 11AC are not applicable when the demand amount is paid before the issuance of the show cause notice. Therefore, the Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act in this case.

Issue 2: Role and liability of the company secretary in Central Excise matters:

The Tribunal also addressed the penalty imposed on the company secretary, highlighting that the secretary's role primarily involves administrative tasks and not day-to-day operational matters related to Central Excise. Consequently, the Tribunal overturned the penalty imposed on the company secretary, emphasizing that the secretary should not be held liable for the company's Central Excise affairs. Both appeals filed by the appellant company and its secretary were allowed, providing consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the penalty under Section 11AC of the Central Excise Act and revoking the penalty imposed on the company secretary based on their respective roles and responsibilities within the company.