1998 (6) TMI 313 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of penalty under sub-rule (6) of Rule 57U.
2. Imposition of penalty under Section 11AC on the assessee.
3. Penalty imposed on the factory manager under Rule 209A.
4. Excess weight of goods cleared by the assessee.
5. Claiming depreciation under Section 32 of the Income Tax Act.
6. Retrospective applicability of Rule 57U.

Analysis:

1. The application sought a waiver of deposit of penalties totaling Rs. 9.24 lakhs under sub-rule (6) of Rule 57U, Rs. 3.02 lakhs under Section 11AC on the assessee, and Rs. 5.00 lakhs under Rule 209A on its factory manager. The penalty was imposed on two grounds: excess weight of goods cleared and claiming depreciation under Section 32 of the Income Tax Act.

2. The penalty was imposed on the assessee for clearing goods in excess of declared weight, with each bag actually containing 20.4 kg instead of the declared 20 kg of finished product. The contention was that since duty was ad valorem, the excess weight did not significantly impact the duty payable. Additionally, the penalty was imposed for wrongly claiming depreciation on capital goods received, which was contested by the assessee citing Rule 57R and the retrospective applicability of Rule 57U.

3. The Departmental Representative argued that the excess weight discrepancy and the delayed statement regarding depreciation claim indicated an intention to avail benefits contrary to law. The representative emphasized the applicability of Rule 57U, which was inserted in the statute book before the notice was issued, justifying the penalty imposition.

4. The tribunal considered the significance of the weight difference in cleared goods and the impact on pricing due to possible moisture evaporation. While acknowledging the ad valorem duty structure, the tribunal noted the importance of accurate weight assessment for determining product value, thus finding weight discrepancy relevant. Similarly, the issue of claiming depreciation required detailed scrutiny, with the tribunal recognizing a prima facie case for the retrospective applicability of Rule 57U.

5. After evaluating all aspects, the tribunal decided to ask the applicant to deposit Rs. 1.00 lac towards penalty, waiving the deposit of the remaining penalty amounts on both the assessee and its factory manager, and staying their recovery. This decision was based on the considerations of duty payment, weight significance, depreciation claim examination, and the retrospective applicability of Rule 57U. Compliance was required by a specified date.