1994 (2) TMI 179 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 173Q(1) of the Central Excise Rules, 1944 for removal of excisable goods without payment of appropriate duty.
2. Interpretation of Rule 57F(1)(ii) in relation to duty liability on cleared inputs.
3. Retrospective applicability of Rule (1A) amendment and its impact on duty payment.
4. Justification of penalty imposition and its relation to duty short-payment.

Analysis:

1. The appeal was filed against the penalty imposed on M/s. Britannia Industries Limited for removing excisable goods without paying the appropriate duty as required under Rule 173Q(1) of the Central Excise Rules, 1944. The charge was that they removed goods received for use in manufacturing biscuits without paying the duty, despite taking Modvat Credit. The issue revolved around the duty liability on such removed inputs.

2. The appellants argued that they had already discharged the duty liability at the hands of the original manufacturers and contended that the duty should not be levied at the time of removal of inputs, creating a scenario of dual manufacturers. They challenged the consistency of Rule 57F(1)(ii) with the concept of manufacture and dutiability under the Central Excises and Salt Act. The retrospective applicability of the amendment introducing Rule (1A) was also debated.

3. The Departmental Representative countered that the amendment in 1992 was not retrospective and emphasized that the duty should have been paid as per Rule 57F(1)(ii) in force at the material time. The Collector imposed a penalty justified by the duty short-payment, citing a Supreme Court judgment that did not require mens rea for penalty imposition.

4. The Tribunal rejected the arguments for retrospective effect of the amendment, upheld the duty liability under Rule 57F(1)(ii), and found the penalty imposition justified due to the duty short-payment. The penalty was reduced to Rs. 10,000 from Rs. 51,000, considering the circumstances. The appeal was partially allowed, modifying the order accordingly, while rejecting it on other grounds.