1987 (7) TMI 251 - AT - Central Excise

Summary

Issues:
1. Breach of procedure under Rule 173-PP leading to penalty imposition.
2. Interpretation of the relaxation provided by the Collector under Rule 173-PP(5).
3. Application of penalty in cases of duty evasion.
4. Assessment of penalty amount based on duty liability discrepancies.

Analysis:

Issue 1: The judgment addresses the breach of procedure under Rule 173-PP, where the appellant company failed to make weekly deposits and debits as required by the Collector. The Collector imposed a penalty for non-compliance, leading to a dispute between the parties.

Issue 2: The appellant argued that despite not following the exact procedure, there was no intention to evade duty, as there were sufficient funds in the PLA to cover the duty amount. The appellant cited relaxations granted by the Collector under Rule 173-PP(5) and contended that the deposits were not in the nature of duty, thus no intentional evasion occurred.

Issue 3: The legal representatives cited precedents indicating that penalties cannot be imposed without the intent to evade duty. The appellant's financial constraints were highlighted as a reason for non-compliance with the deposit requirements, emphasizing the lack of deliberate evasion.

Issue 4: The judgment differentiated between the penalty imposition for different months based on the actual duty liability discrepancies. While no penalty was justified for one appeal due to sufficient credits, penalties were reduced for the other appeals based on the duty liability and procedural non-compliance.

The judgment analyzed the specific terms of the relaxation provided by the Collector under Rule 173-PP(5) and the company's failure to adhere to the prescribed procedure. It distinguished between intentional evasion and procedural lapses, leading to varying penalty assessments based on individual circumstances and duty liability discrepancies. The reduction of penalties in some cases reflected a balance between the offense committed and the financial constraints faced by the appellant company.