2000 (9) TMI 390 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 173Q(i)(bb) and (d) of the Central Excise Rules on M/s. Shobhit Impex and individuals.
2. Applicability of the penalty rules to the registered dealer.
3. Specific sub-clause under Rule 173Q for penalty imposition.
4. Waiver of pre-deposit of penalty and stay on recovery during appeals.

Analysis:
1. The judgment deals with the imposition of penalties under Rule 173Q(i)(bb) and (d) of the Central Excise Rules on M/s. Shobhit Impex and individuals. The penalties were imposed due to the issuance of modvatable invoices without physically bringing the goods into their registered godown, leading to the facilitation of inadmissible credit of duty by buyers. A penalty of Rs. 64 lakhs was imposed on M/s. Shobhit Impex, and penalties under Rule 209A were imposed on the Manager and General Power of Attorney holder, as well as a clerk of another entity associated with M/s. Shobhit Impex.

2. The issue of the applicability of the penalty rules to a registered dealer was raised during the proceedings. It was argued that the rules under which the penalties were imposed were not attracted to the registered dealer as no duty liability was cast upon them. The Tribunal found prima facie substance in this submission, noting that the rules in question cover persons who take credit of duty or contravene provisions with intent to evade payment of duty, which did not seem to apply to the registered dealer in this case.

3. The judgment also addresses the specific sub-clause under Rule 173Q for penalty imposition. It was observed that the show cause notice did not specify the sub-clause of Rule 173Q under which the penalty was proposed to be imposed. The applicants contended that the relevant sub-rule did not apply to them during the period in question, as all invoices were for imported goods on which the buyer could avail of credit of additional duty. The Commissioner agreed with this contention, indicating a misapplication of the penalty rule.

4. Finally, the Tribunal decided to waive the pre-deposit of penalty by the registered dealer and stay the recovery during the pendency of the appeals. The same treatment was extended to the other two applicants, whose penalties were proposed under Rule 173Q in the show cause notice but imposed under Rule 209A in the adjudication order. This decision ensured that the penalties were not enforced immediately, allowing for a fair hearing and consideration of the issues raised during the appeals process.