1997 (9) TMI 249 - AT - Central Excise

Summary

Issues:
- Challenge of demand of duty and imposition of penalty
- Invocation of longer period of limitation
- Penalty imposed on the firm under Rule 173Q and on partners under Rule 209A
- Confiscation of goods and imposition of fine
- Assessment of duty for clearances made in June 1988
- Imposition of penalty on the firm and partners

Analysis:

The judgment involves a batch of four appeals challenging the demand of duty and penalty imposed by the Collector of Central Excise, Aurangabad. The Collector held that the appellant firm had cleared excisable goods without payment of duty, invoking a longer period of limitation due to the firm's failure to file a classification list and comply with excise formalities. Penalty was imposed on the firm under Rule 173Q, while the partners were proceeded against under Rule 209A.

The appellant's counsel admitted that the notification allowing duty exemption was not applicable to their goods after a certain date. The firm believed in the continued applicability of the notification based on a publication and had corresponded with excise authorities upon learning about their products' dutiability. They had made a deposit exceeding the required amount and filed a refund claim, which was partially granted. The counsel argued against the penalty, stating there was no intention to evade duty and the penalty amount was excessive.

Regarding the confiscation of goods, the appellant's counsel argued that the goods were still in the factory premises and no attempt was made to remove them without payment of duty. The counsel cited precedents where confiscation was not warranted in similar cases.

The respondent's representative opposed the arguments, emphasizing the firm's failure to file a classification list and remove goods after duty payment as justifying the Collector's decision. The respondent argued for upholding the penalty on the partners under Rule 209A.

The Tribunal considered the submissions and found merit in the appellant's argument regarding the limitation period and duty assessment for clearances in June 1988. The Tribunal remitted the case to the Assistant Commissioner for assessment. The Tribunal accepted the plea regarding confiscation and reduced the redemption fine. The penalty imposed on the partners under Rule 209A was set aside, as the partners lacked knowledge of the goods' liability to confiscation. The penalty on the firm was also set aside due to disproportionality and lack of quantification of the duty amount. The matter was referred back for quantifying the duty due.

In conclusion, the appeals were allowed, setting aside the penalties imposed and remitting the case for duty assessment.