1998 (1) TMI 170 - AT - Central Excise

Issues:
1. Imposition of penalty under Rule 173Q for contravention of Rule 173C and 173G of the Central Excise Rules, 1944.
2. Challenge against the imposition of penalty.
3. Allegations of evasion of duty by diverting goods to duty paid godown instead of consignee.
4. Justification for the imposition of penalty based on the appellant's actions.
5. Timing of payment of the differential duty and its relevance to the case.
6. Determination of intentional evasion of duty and justification for penalty.

Analysis:
1. The appeal was filed against the imposition of a penalty of Rs. 5,000 under Rule 173Q for contravention of Rule 173C and 173G of the Central Excise Rules, 1944. The Additional Collector of Central Excise, Jaipur had passed the Order-in-Original No. 56/90, dated 31-10-1990, directing the appropriation of Rs. 1,39,606.71 deposited by the appellant to the Government Account. The appellant, engaged in fabric manufacturing, was accused of diverting goods to the duty paid godown instead of the consignee, leading to evasion of duty.

2. The appellant, while not disputing the duty aspect, challenged only the imposition of the penalty. The appellant's defense was centered around the timing of payments made in response to the show cause notice and the absence of mala fides in their actions. The appellant contended that goods intended for a specific consignee were diverted to the duty paid godown due to concerns about non-payment by the buyer, which was a common practice.

3. The case revolved around the appellant's actions of diverting goods meant for consignees to the duty paid godown, where they were resold at different prices. The appellant's inconsistent statements and actions, as well as the diversion of goods based on telephonic instructions, raised doubts about the intent behind the diversion. The lower authorities concluded that the diversion was a deliberate attempt to evade duty, supported by the resale of goods at prices higher than approved, indicating a stratagem to avoid duty payment.

4. The appellant's argument that the early payment of differential duty before the inspection by the Anti Evasion Wing and the show cause notice demonstrated their lack of mala fides was countered by the suggestion that the appellant may have been aware of impending scrutiny and initiated corrective actions in response. The timing of the payments was viewed as a reaction to potential detection rather than a demonstration of good faith.

5. The Tribunal found that the appellant's actions of deliberately diverting goods to the duty paid godown instead of consignees with the intent to evade duty warranted the imposition of the penalty. The penalty amount was deemed reasonable, considering the gravity of the offense. The Tribunal upheld the imposition of the penalty, dismissing the appeal filed by the appellant.

This detailed analysis highlights the key legal and factual aspects of the judgment, addressing each issue raised in the case comprehensively.

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