2004 (3) TMI 137 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 209A.
2. Refund of deposited amount.
3. Validity of dropping penal proceedings by the Commissioner.

Analysis:

Issue 1: Imposition of penalty under Rule 209A
The appeals arose from an Order-in-Appeal passed by the Commissioner of Central Excise, Hyderabad, where demands in the Show Cause Notice were dropped, but a penalty of Rs. 10,000 was imposed under Rule 209A. The Commissioner (Appeals) concluded that the dropping of proceedings by the Additional Commissioner was correct due to lack of evidence of the firm's engagement in computer manufacturing. The Commissioner noted that penal provisions cannot be invoked if demands are not sustained, citing the Supreme Court judgment in CCE v. HMM Limited. The penalty under Rule 209A was contested, with the appellant arguing that maintaining invoices is irrelevant when duty demands are dropped. The Tribunal upheld the dropping of penalty imposition, citing precedents and the lack of duty confirmation.

Issue 2: Refund of deposited amount
The appellants had deposited an amount during investigation, which was eligible for refund as the Show Cause Notice was dropped by the Order-in-Original and the Revenue did not challenge it. The Tribunal held that the appellants were entitled to a refund as per relevant judgments, allowing the appeal and granting consequential relief for the refund of the deposited amount.

Issue 3: Validity of dropping penal proceedings by the Commissioner
The Commissioner had dropped penal proceedings based on the absence of duty confirmation, in line with the Apex Court judgment in the case of HMM Limited. The Revenue invoked Rule 209A for penalty imposition due to record-keeping violations, but both authorities confirmed the absence of manufacture and duty liability. Consequently, the Tribunal upheld the Commissioner's decision to set aside the penalty, deeming it legally sound and rejecting the Revenue's appeal for lack of merit.