1999 (7) TMI 349 - Commissioner - Central Excise

Summary

Issues:
Imposition of penalties for contravention of various rules in the Central Excise law.

Analysis:
The main issue in this appeal was whether the imposition of penalties amounting to Rs. 10,000 on the appellant for contravention of Rules 9(1), 173Q(1), and other rules such as 43, 52A, 53(3), 57T, 173B, etc., could be legally sustained. The appellants, who were manufacturers of cotton yarn, had not filed the required RT 12 return despite being issued a registration certificate. They also failed to comply with rules related to pre-authentication of invoices, filing of declarations, obtaining pre-authentication of registers, and submitting necessary documents. The Assistant Commissioner (A.C.) issued a show cause notice for penalties, which led to the impugned order.

The appellants argued that there were no allegations of clandestine removal or contravention of Rule 173Q in the show cause notice. They contended that the lapses were technical in nature, without any malicious intent, as they were new to Central Excise procedures. The appellants cited case laws to support their plea for penalty vacation. The A.C. rejected the appellants' plea, stating that ignorance of procedures could not be an excuse for non-compliance.

After careful consideration, the Commissioner found merit in the appellants' arguments. It was noted that the appellants were new to Central Excise law, and the department should have provided guidance instead of immediately resorting to penal action. The Commissioner observed that the appellants rectified their omissions themselves, indicating no mala fide intentions. Citing the Supreme Court's decision in Hindustan Steel Ltd., it was concluded that a simple warning would have sufficed instead of imposing penalties. Consequently, the penalties of Rs. 10,000 were vacated, and the appeal was allowed.

In conclusion, the judgment highlighted the importance of providing guidance to new entrants in Central Excise procedures and emphasized the need for a balanced approach in enforcing compliance. The decision to vacate the penalties was based on the absence of malicious intent and the appellants' efforts to rectify their mistakes, underscoring the significance of cooperation and understanding in regulatory enforcement.