2010 (3) TMI 273 - HC - Central Excise

Penalty power of the tribunal to reduce the penalty the question is answered in favor of assessee and against the revenue - Union of India and others vs. Dharmendra Textiles Processors and others reported as 2008 -TMI - 31520 - SUPREME COURT and Union of India vs. Rajasthan Spinning & Weaving Mills, reported as 2009 -TMI - 33419 - SUPREME COURT OF INDIA

Summary

Issues:
1. Tribunal's power to reduce penalty without statutory provisions.
2. Significance of provisional release of seized goods and vehicle under Rule 206(3) of Central Excise Rules, 1944.

Analysis:
1. The first issue pertains to whether the Tribunal exceeded its powers by reducing the penalty without statutory provisions. The Court referred to the question raised by the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal was questioned on the justification of reducing the penalty when the gravity of the offense was fully established, despite the absence of statutory provisions empowering such reduction. The Court cited precedents from the Supreme Court in Union of India vs. Dharmendra Textiles Processors and Union of India vs. Rajasthan Spinning & Weaving Mills. The judgment favored the assessee, aligning with the decisions in the mentioned cases.

2. The second issue involves the provisional release of seized goods and vehicle under Rule 206(3) of Central Excise Rules, 1944, and its impact on the liability of confiscation. The Court highlighted the significance of the B-11 Bond, which imposes conditions on the party for the release of goods. The bond requires the payment of all dues, including duty, value, penalty, or other charges demandable on the goods within a specified period. The Court's decision, in this case, was influenced by the judgments in Dharmendra Textiles Processors and Rajasthan Spinning & Weaving Mills cases. The reference was answered in favor of the assessee, consistent with the outcomes of the mentioned Supreme Court cases.

This judgment by the Punjab & Haryana High Court provides a detailed analysis of the issues related to the Tribunal's authority to reduce penalties without statutory provisions and the implications of provisional release of seized goods under the Central Excise Rules. The Court's decision, guided by relevant Supreme Court precedents, favored the assessee in both issues, aligning with the interpretations and rulings established in previous cases.