2000 (10) TMI 600 - AT - Central Excise

Summary

Issues:
1. Liability for Central Excise duty on metallic safety plugs.
2. Imposition of penalty under Rule 209A on the manufacturer.
3. Correct valuation for duty purposes.
4. Reduction of penalty imposed on the manufacturer.
5. Liability of the recipient for penalty.

Analysis:
1. The appeal involved a manufacturer of pressure cookers procuring metallic safety plugs from another company and supplying them to customers. A show cause notice was issued regarding the duty payment on these safety plugs. The manufacturer was accused of acquiring and consuming non-duty paid goods, leading to a penalty under Rule 209A. The tribunal considered the lack of means to determine duty payment before a specific date, giving the benefit of doubt to the manufacturer due to the absence of mens rea during the period in question.

2. Another issue was the appeal by the company supplying the safety plugs, who were asked to pay duty and were penalized under Rule 173Q (1). The tribunal remanded the matter to lower authorities to reevaluate the correct valuation for duty, considering a previous case law and reduced the penalty imposed on the supplier based on the circumstances of the case.

3. The tribunal examined the period of receipt of the goods and the absence of Section 12A during that time, which required the price of goods to indicate duty payment. Since the appellants were not availing Modvat and their end product was exempt from duty, the tribunal gave them the benefit of doubt. It was noted that penalty should be for conscious disregard of the law, not a technical breach.

4. Referring to a previous case involving the manufacturer of the excisable goods, where penalty was reduced due to innocent breach of law, the tribunal concluded that the recipient of the goods should not be penalized. The total duty amount was subject to reduction based on the prescribed valuation formula, indicating that penalty determination should align with the lower duty liability.

5. Ultimately, the tribunal set aside the penalty imposed on the manufacturer, stating that there was no cause for penalty on the recipient. The appeal was allowed, and consequential relief was granted.