1990 (12) TMI 202 - AT - Central Excise

Issues: Imposition of penalty by Collector of Central Excise, Compliance with Central Excise duty payment, Request for setting aside or reducing penalty, Application of Rule 173Q of Central Excise Rules, Leniency in penalty imposition.

The judgment by the Appellate Tribunal CEGAT, CALCUTTA involved an appeal by M/s. Lektrolite, Calcutta against the penalty imposed by the Collector of Central Excise, Calcutta-I Collectorate. The Collector had imposed a penalty of Rs. 5000 on M/s. Lektrolite and directed them to pay Central Excise duty of Rs. 9954, which they complied with. M/s. Lektrolite, through their counsel, argued that being a small-scale unit, the penalty was excessively heavy, and requested for setting aside or reducing the penalty to a token amount. The Departmental Representative contended that M/s. Lektrolite should have obtained a Central Excise license earlier and paid duty on clearances exceeding the exemption limit of Rs. 7.5 lakhs. The Tribunal noted that proceedings were initiated against both M/s. Lektrolite and another company, Peico Electronics, for manufacturing goods beyond the exemption limit. The Tribunal found that M/s. Lektrolite had cleared excisable goods without payment of duty exceeding the exemption limit, leading to the penalty imposition. The penalty was imposed under Rule 173Q of the Central Excise Rules, as M/s. Lektrolite had not obtained the required license and had removed excisable goods in contravention of the Rules. Despite the penalty being a token amount compared to the value of the goods involved, the Tribunal upheld the penalty, considering the leniency shown by the Collector in the circumstances. The Tribunal dismissed the appeal and upheld the penalty imposed by the Collector.

In this case, the primary issue was the imposition of a penalty by the Collector of Central Excise on M/s. Lektrolite for clearing excisable goods without payment of duty exceeding the exemption limit. M/s. Lektrolite argued for leniency due to being a small-scale unit, requesting the penalty to be set aside or reduced. The Departmental Representative highlighted the failure of M/s. Lektrolite to obtain a Central Excise license on time and pay duty on clearances beyond the exemption limit. The Tribunal considered the arguments and found that M/s. Lektrolite had indeed contravened the Central Excise Rules by not obtaining the necessary license and clearing goods without paying the required duty. Despite the penalty being relatively low compared to the value of the goods involved, the Tribunal upheld the penalty, taking into account the leniency shown by the Collector in the penalty imposition.

The application of Rule 173Q of the Central Excise Rules was crucial in this judgment, as the penalty was imposed under this rule due to the non-compliance of M/s. Lektrolite with the licensing and duty payment requirements. The Tribunal noted that M/s. Lektrolite had failed to obtain a Central Excise license promptly after crossing the exemption limit and had cleared goods without paying the duty, which was due for a significant period. The Tribunal found that M/s. Lektrolite's actions fell under the provisions of Rule 173Q, justifying the penalty imposed by the Collector.

The issue of leniency in penalty imposition was also addressed in the judgment. Despite the penalty being relatively low compared to the value of the goods involved, the Tribunal upheld the penalty, considering the circumstances and the Collector's lenient view in fixing the quantum of the penalty. The Tribunal acknowledged the Collector's observation of taking a lenient view and found the penalty to be appropriate in the given situation. As a result, the Tribunal dismissed the appeal and upheld the penalty imposed by the Collector, emphasizing the importance of complying with Central Excise regulations and the consequences of non-compliance.

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