2005 (8) TMI 224 - AT - Central Excise

Summary

Issues:
Challenge to modification of penalty and interest by Commissioner (Appeals)

Analysis:
The appellant, Commissioner of Central Excise, Lucknow, contested the order of the Commissioner (Appeals) which reduced the penalty under Rule 173Q of the Central Excise Rules, 1944 from Rs. 15,000 to Rs. 1,000 and set aside the interest imposed under Section 11AB of the Central Excise Act, 1944. The respondent, a manufacturer of sugar and molasses, faced charges related to irregularities in credit entries and contravention of tax rules. Both authorities found the respondent in violation of Rule 9 and Rule 57R(8) of the said rules.

The department argued that the penalty reduction to Rs. 1,000 was erroneous as the minimum prescribed penalty under Rule 173Q was Rs. 5,000. They contended that interest should have been charged under Section 11AB. The respondent had utilized a portion of the reversed credit towards payment of duty, which was considered a conscious violation of the law. The breach of Rule 9 led to the application of Rule 173Q(A) for penalty imposition.

Regarding the credit taken on capital goods, the respondent was found to have contravened Rule 57R(8), which disallowed credit if depreciation under the Income Tax Act was claimed. The show cause notice demanded interest under Section 11AB, but it was noted that there was no intent to evade duty payment. The Commissioner (Appeals) found the respondent's extenuating circumstances genuine and set aside the interest charge.

The Appellate Tribunal upheld the impugned order, dismissing the appeal. It was clarified that Rule 173Q(1)(a) did not prescribe a minimum penalty amount, only a maximum limit. The discretion to impose a penalty below Rs. 5,000 was maintained based on the value of excisable goods. The cross-objections were disposed of as no substantive prayer was made. The judgment was delivered on 11-8-2005.