1986 (1) TMI 218 - AT - Central Excise

Summary

Issues:
Violation of Central Excise Rules regarding removal of excisable goods in excess of exemption limit without payment of duty. Applicability of Rule 173-Q of the Central Excise Rules, 1944. Justification for penalty imposition and its reduction.

Analysis:

Issue 1: Violation of Central Excise Rules
The appellant firm, engaged in manufacturing aerated waters, exceeded the exemption limit specified under Notification No. 80/80 and cleared goods without payment of Central Excise duty. Central Excise officers observed the excess clearance and issued a show-cause notice for contravention of Rules 9(1), 173F, and 173G of the Central Excise Rules, 1944. The appellant admitted the removal without payment but cited reasons like sick personnel and peak season workload. However, the Adjudicating Authority found the reasons untenable and noted warnings given to the firm regarding the excess clearance. The Tribunal held that the removal of goods in contravention of rules was established, rejecting the appellant's defense of lack of guilty knowledge.

Issue 2: Applicability of Rule 173-Q
The Tribunal referenced Rule 173-Q of the Central Excise Rules, 1944, which deals with confiscation and penalty for contraventions. It clarified that for offenses under clauses (a), (b), or (c) of Rule 173-Q(1), guilty knowledge is not necessary, unlike in clause (d). The Tribunal emphasized that the appellant's defense of lack of mens rea was not tenable as the removal of goods without payment constituted a clear contravention of Rule 173-Q(1)(a). The Tribunal highlighted the importance of maintaining a sufficient balance in the PLA account and paying duty before removal, indicating the appellant's violation of trust and disregard for warnings.

Issue 3: Penalty Imposition and Reduction
The appellant contested the penalty amount of Rs. 15,000 as excessive, arguing for a reduction. The Tribunal acknowledged the appellant's admission of the offense before the show-cause notice and subsequent duty payment. Considering these factors, the Tribunal reduced the penalty to Rs. 10,000, deeming it sufficient to serve justice while acknowledging the appellant's cooperation post the violation.

In conclusion, the Tribunal partially allowed the appeal, affirming the Adjudicating Authority's findings on the violation but reducing the penalty imposed on the appellant. The judgment emphasized the importance of adherence to Central Excise Rules, accountability in duty payment, and the consequences of exceeding exemption limits without due diligence.