1999 (5) TMI 108 - AT - Central Excise

Summary

Issues: Appeal against decision of Collector of Central Excise regarding short levy and penalty imposition.

Analysis:
1. The appellant, a manufacturer of goods under Chapters 84 and 85 of the Central Excise Tariff Act, appealed against the Collector's decision in Order-in-Original No. 139/1994, where a penalty of Rs. 1 lakh was imposed after dropping the show cause notice for short levy.

2. The appellant shifted its business location in August 1987 and applied for exemption in November 1987, claiming to have started production in August 1987. Despite subsequent communications detailing production from April 1987 onwards, the appellant faced allegations of non-compliance with registration and licensing requirements, leading to the show cause notice issued in 1991.

3. The appellant's counsel argued that the department was aware of the production details from the beginning, as evidenced by communications and approved classification lists. Citing a Tribunal decision, the counsel contended that the department's approval precluded allegations of evasion and mala fide intentions.

4. In contrast, the department's representative supported the Collector's reasoning for imposing the penalty.

5. The judge, after considering the arguments, referenced a Supreme Court judgment emphasizing that penalties for tax delinquency are civil in nature and do not require proof of mens rea. Examining the case facts, discrepancies in the appellant's production commencement dates were noted, but the lack of departmental inquiry despite approved documents led to the conclusion that the penalty imposition was unwarranted.

6. The judge highlighted the department's failure to question discrepancies in the appellant's communications and approved documents, leading to the decision that the penalty could not be justified. Consequently, the appeal was allowed, overturning the penalty imposition.