2005 (1) TMI 233 - AT - Central Excise

Summary

Issues: Setting aside penalty amount under Rule 173Q of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944 due to theft in the factory.

Analysis:
1. Penalty Imposition: The Appellate Tribunal CESTAT, Mumbai addressed the issue of penalty imposition on M/s. Kopran Ltd. and Shri Kailash Singh, Excise Executive of M/s. Kopran. The penalty of Rs. 44,955/- was imposed on the company under Rule 173Q of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944, while a penalty of Rs. 10,000/- was imposed on the individual. The consultant for the appellants argued that a theft occurred in the factory in 1999, leading to a FIR being lodged with the police. Citing legal precedents, the consultant contended that accidental loss, including theft, should not imply an intention to contravene provisions of the Central Excise Act or Rules.

2. Department's Position: The ld. JDR representing the department upheld the Commissioner (Appeals) order, emphasizing that the appellants did not inform the department about the theft incident. It was noted that the duty amount was paid without protest, raising concerns solely about the penalty aspect.

3. Decision: Upon considering arguments from both sides and examining the records, the Member (J) found no mens rea on the part of the appellants, especially since they had lodged a FIR regarding the theft incident. Given the absence of contestation regarding the duty amount and the circumstances surrounding the theft, the Member (J) concluded that there was no justification for the penalty imposition. Consequently, the penalty imposed on the appellants was set aside by the Appellate Tribunal CESTAT, Mumbai.