1991 (5) TMI 181 - AT - Central Excise

Summary

Issues:
- Alleged contravention of provisions of Rule 9(1), 173B, 173F, and 173G(1) of the Central Excise Rules 1944.
- Applicability of the proviso to Section 11A regarding suppression of facts.
- Levy of penalty under Rule 173Q of the Central Excise Rules 1944.

Analysis:
1. The appellant challenged the order passed by the Additional Collector of Central Excise, Calcutta, alleging contravention of various rules. The Additional Collector initially held that there was no suppression of facts warranting the proviso to Section 11A, rendering the demand for duty beyond the six-month period unsustainable. However, he found a violation under the self-removal procedure, leading to a penalty of Rs. 6,000 under Rule 173Q.

2. The appellant's representative argued that the duty determination at 15% and goods removal under Rule 173F did not violate any rules. He contended that the department's subsequent approval of a 20% duty rate, after one year, did not invalidate the initial determination. The representative emphasized that Chapter VIIA, specifically Rule 173F, governed the removal process, ensuring compliance.

3. The respondent's representative countered, asserting a violation of Rule 9(1) due to the discrepancy between the paid 15% duty and the approved 20% rate. The argument centered on the duty payment requirement before goods removal, as stipulated by Rule 9(1). The representative maintained that the appellant's actions constituted a clear breach, justifying the penalty imposition.

4. The tribunal analyzed the conflicting interpretations of Rule 9(1) and Rule 173F. It concluded that the duty payment at the determined rate under Rule 173F fulfilled the Rule 9(1) obligation. By aligning the rules' provisions, the tribunal dismissed the violation claim under Rule 9(1). Additionally, it rejected the contention that deliberate underpayment warranted a penalty, emphasizing timely duty assessment approval.

5. Ultimately, the tribunal allowed the appeal, setting aside the imposed penalty. It emphasized the importance of promptly approving duty assessments to prevent delays in goods removal. The tribunal's decision rested on the harmonious reading of the rules and the appellant's compliance with the prescribed procedures, leading to the penalty's annulment.