2010 (5) TMI 308 - AT - Central Excise

Penalty - A show cause notice was issued proposing imposition of penalty under Rule 27 of the Central Excise Rules, 2002 for contravention of the provisions of the Notification No. 36/01-C.E. read with Rule 9(iii) of Central Excise Rules, 2002. Held that - Rule 9 of Central Excise Rules 2001 permits validity of registration under Rule 174 of erstwhile Central Excise Rules, 1944. Raising objection and initiating proceedings high handed exercise as no change in facts shows in SCN. No case of department that assessee failed to fulfill condition of combine registration. Department not attempt to implement order of original authority directing assessee to seek approval. Certificate issued in 1994 and renewed in 2004 valid for operation. No ex post facto approval required in the instant case. Penalty unreasonable.

Summary

Issues: Validity of registration certificate under Central Excise Rules, 2001 and 2002; Imposition of penalty under Rule 27 of Central Excise Rules, 2002.

In this case, the appellant, a manufacturer of pesticides, had obtained a single registration for their factory premises divided by a public road in 1994 under Rule 174 of the Central Excise Rules, 1944. The Department later issued a revised PAN based registration certificate in 2004. However, in 2005, officers claimed that the registration was not valid as the appellant did not seek concurrence for single registration under Notification No. 36/01-C.E. (N.T.). A show cause notice was issued, and a penalty of Rs. 5000 was imposed under Rule 27 of the Central Excise Rules, 2002. The appellant challenged this order before the Tribunal, arguing that their single registration was valid for separated premises. The Tribunal noted that Rule 9 of the Central Excise Rules, 2001 allowed the validity of registration under Rule 174 of the old rules. It criticized the Department's delayed objection, stating that the penalty imposition seemed unnecessary as no change in facts had occurred. The Tribunal found that the appellant's registration was valid, and no ex-post facto approval was needed. It concluded that the Department's actions were trivial, and the penalty was unjustified. The appeal was allowed, and relief was granted to the appellant as per law.

In analyzing the first issue of the validity of the registration certificate, the Tribunal highlighted the provisions of Rule 9 of the Central Excise Rules, 2001, which validated registrations under the previous rules. It emphasized that the revised PAN based registration certificate issued in 2004 was accepted without objection, making the Department's objection in 2005 seem arbitrary. The Tribunal concluded that the appellant's registration was valid for their operations, and no additional approval was required at that stage, dismissing the Department's claim of non-compliance.

Regarding the second issue of the imposition of a penalty under Rule 27 of the Central Excise Rules, 2002, the Tribunal criticized the Department's handling of the matter. It noted that the Department had not taken steps to implement the original authority's directions, indicating a lack of seriousness in pursuing the penalty. The Tribunal found that the Department's actions were wasteful of time and resources, as the appellant had not been non-compliant with the combined registration conditions. Ultimately, the Tribunal ruled in favor of the appellant, stating that there was no justification for sustaining the penalty, and the appeal was allowed with consequential relief as per the law.