1999 (8) TMI 224 - AT - Central Excise

Summary

Issues:
1. Interpretation of exemption Notification No. 179/85 for conversion of stone into metal stone.
2. Sustainability of penalty imposed by the Collector.

Issue 1 - Interpretation of Exemption Notification:
The case involved the interpretation of Notification No. 179/85 regarding the conversion of stone into metal stone by the appellants in a workshop within the leased mine area. The adjudicating authority initially denied the benefit of the notification, but the Tribunal, based on the definition of 'mine' in the Mines Act, allowed the appeal. The Tribunal clarified that even if a new commodity is created through crushing activities, the notification's coverage would still apply. Consequently, the demand of Rs. 1,04,192.00 was set aside.

Issue 2 - Sustainability of Penalty:
The second issue pertained to the penalty of Rs. 10,000 imposed by the Collector. The appellant argued that since the demand was set aside, the penalty should also be nullified. The appellant cited a Tribunal stay order in a different case where both duty and penalty were waived. However, the SDR contended that the stay order was not final and was in a separate matter. The SDR highlighted that the appellants did not pay duty as per the approved classification list, leading to a violation of rules. The SDR argued that penalty under Rule 173Q(1)(a) was justified due to the duty violation.

Judgment:
After considering both sides, the Tribunal agreed with the SDR's argument but deemed the penalty amount of Rs. 10,000 to be excessive. Consequently, the penalty was reduced to Rs. 5,000. In conclusion, the duty demand of Rs. 1,04,192 was set aside, and the penalty was reduced to Rs. 5,000, affirming the appellants' liability for penalty under Rule 173Q(1)(a) for violating duty payment rules.