2001 (4) TMI 357 - AT - Central Excise

Summary

Issues:
1. Eligibility for duty concessions under Notification 1/93 due to the transfer of brand name.
2. Allegations of contravention of provisions of Central Excise Rules and imposition of penalty.
3. Applicability of penalty under Rule 173Q.
4. Compliance with classification lists and declarations under Central Excise Rules.
5. Procedural irregularities and lack of evidence for penalty imposition.

Issue 1: Eligibility for duty concessions under Notification 1/93 due to the transfer of brand name:

The appellant, a small scale ice-cream manufacturer, availed duty concessions under Notification 1/93. However, a notice of demand and penalty were issued as their brand name was transferred to another entity, rendering them ineligible for the exemption. The Department invoked a longer period under Section 11A for the demand, alleging suppression of the brand name transfer.

Issue 2: Allegations of contravention of provisions of Central Excise Rules and imposition of penalty:

The Commissioner found that the appellant was no longer eligible for the duty concession due to the brand name transfer. The Commissioner upheld the duty demand and imposed a penalty under Rules 173Q(1)(a) and 173(Q)(1)(d) of the Central Excise Rules, citing suppression of facts and non-disclosure of the brand name transfer.

Issue 3: Applicability of penalty under Rule 173Q:

The Tribunal considered the imposition of a penalty of Rs. one lakh under Rule 173Q. Referring to a previous case, the Tribunal highlighted that penalties may not be justified in cases where there was no deliberate concealment of facts and where the duty amount was paid promptly upon realization of errors.

Issue 4: Compliance with classification lists and declarations under Central Excise Rules:

The Tribunal observed that the appellant had filed the necessary classification lists and declarations as required under the Central Excise Rules. It was noted that the assessments were provisional until a specific date, and no penalty could be imposed for provisional clearance. The Tribunal also emphasized the lack of evidence supporting deliberate suppression or withholding of facts by the appellant.

Issue 5: Procedural irregularities and lack of evidence for penalty imposition:

The Tribunal found that there was no evidence of clandestine removal of goods or non-compliance with relevant rules to justify the imposition of penalties under Rule 173Q. The adjudicator's failure to specify the basis for penalty liability under Rule 173Q(1)(a) or 173Q(1)(d) was noted, rendering the order deficient. Additionally, the Tribunal referenced a case where penalties were not imposed when corrective actions were taken before the issuance of a show cause notice.

In conclusion, the Tribunal set aside the penalty imposed, noting procedural irregularities, lack of evidence for penalty imposition, and compliance with Central Excise Rules by the appellant.