1996 (12) TMI 200 - AT - Central Excise

Summary

Issues:
1. Interpretation of Central Excise Rules regarding the obligation to obtain a license.
2. Application of exemption notifications for certain goods.
3. Imposition of personal penalty under Rule 173Q of Central Excise Rules.

Issue 1: Interpretation of Central Excise Rules regarding the obligation to obtain a license:
The appeal centered around whether M/s. Ramesh Lal & Sons were required to obtain a Central Excise License as per Rule 174 of the Central Excise Rules, 1944, or if they were exempted under Notification No. 111/78-C.E. The Supdt., Technical, Central Excise found the appellants liable for not filing the required declaration, stating that the goods manufactured by them were not exempt from Rule 174. The Collector of Central Excise (Appeals) upheld this decision, emphasizing that the machines produced by the appellants did not fall under the category of "sewing machines and parts thereof" for exemption under Notification No. 234/82-C.E.

Issue 2: Application of exemption notifications for certain goods:
During the hearing, the consultant for the appellants argued that their goods were unconditionally exempted from duty under relevant notifications, hence they were not obligated to file a declaration or apply for a license. The consultant cited legal precedents, including the Apex Court decision in Hindustan Steel Ltd. v. State of Orissa, to support the contention that penalties should not be imposed unless there is deliberate defiance of the law. However, the JDR representing the respondents maintained that the goods manufactured by the appellants were not unconditionally exempted, justifying the imposed penalty of Rs. 100.

Issue 3: Imposition of personal penalty under Rule 173Q of Central Excise Rules:
The tribunal deliberated on whether the penalty of Rs. 100 imposed on the appellants was justified. It was established that the goods produced by the appellants, such as bag closure machines and embroidery machines, did not fall under the description of "sewing machines" as per the exemption notifications. Despite being asked to file a declaration, the appellants failed to do so, claiming they were not required to. The tribunal concluded that the failure to obtain a license and file a declaration, especially when there was doubt about the exemption applicability, did not warrant penalty avoidance. Therefore, the tribunal upheld the penalty and rejected the appeal, emphasizing the mandatory nature of license requirements and the need for strict compliance with applicable rules and notifications.

Conclusion:
The tribunal confirmed the penalty of Rs. 100 imposed on the appellants for non-compliance with the Central Excise Rules, ruling that their goods were not unconditionally exempted from duty and that the failure to obtain a license and file a declaration was a violation of the mandatory provisions. The appeal was dismissed, and the penalty upheld in line with the Collector of Central Excise (Appeals) decision.