1999 (9) TMI 264 - AT - Central Excise

Summary

Issues:
Reduction of penalty amount by Commissioner (Appeals) on appeal filed by respondents against order-in-original of Additional Commissioner.

Analysis:

The appeal was filed by the Revenue against the order of the Commissioner (Appeals) who reduced the penalty amount imposed by the Additional Commissioner on the respondents. The respondents, engaged in the manufacture of PVC pipes, were found with shortages in stock during a surprise check by Central Excise officers. The Additional Commissioner, after not being satisfied with the respondents' explanation, demanded duty on the finished goods found short and disallowed Modvat credit on PVC resin, imposing a penalty under Rule 173Q of the Central Excise Rules. The respondents met the demand of Excise duty and adjusted the amount in the register but contested the penalty. The Commissioner (Appeals) modified the order, reducing the penalty to Rs. 50,000, leading to the Revenue's appeal before the Tribunal.

The Revenue challenged the Commissioner (Appeals) order, arguing that the penalty amount could not be reduced on appeal. The Tribunal analyzed Rule 173Q, stating that while it prescribes the maximum penalty, the competent authority has discretion in imposing penalties based on circumstances. The Tribunal noted that the respondents had adjusted the Excise duty demand and Modvat credit in the register, and without evidence of willful misconduct, the penalty could be reduced. Referring to Section 11AC of the Central Excise Act, the Tribunal clarified that while it mandates the penalty to be equal to the duty, it does not restrict the penalty from being lower. Citing a Supreme Court case, the Tribunal emphasized that penalty amounts specified are maximum and not mandatory, allowing the Commissioner (Appeals) to reduce penalties judiciously.

In conclusion, the Tribunal dismissed the Revenue's appeal, finding no merit in challenging the Commissioner (Appeals) decision to reduce the penalty amount. The judgment highlights the discretionary power of authorities in penalty imposition and the flexibility within legal provisions to adjust penalties based on circumstances, ensuring a fair and just approach in tax matters.