2000 (1) TMI 608 - AT - Central Excise

Summary

Issues: Duty liability on glass neck tubes removed without payment of central excise duty, imposition of penalty under Rule 173Q of the Central Excise Rules, justification for penalty imposition.

Duty Liability on Glass Neck Tubes:
The appeal involved the duty liability concerning glass neck tubes manufactured by the appellant at one unit and removed without paying central excise duty to another unit. The Collector of Central Excise confirmed the duty amount and imposed a penalty under Rule 173Q of the Central Excise Rules. The appellant contended that both units belonged to the same company, and there was no intention to evade duty as they believed the receiving unit was eligible for Modvat credit. They referenced relevant legal precedents to support their argument.

Imposition of Penalty:
The appellant argued that they had paid the full duty and availed of Modvat credit at the receiving unit, hence questioning the imposition of a penalty of Rs. 1,00,000. The respondent, on the other hand, highlighted that the glass tubes were removed without proper excise formalities, indicating an intention to evade duty. The absence of classification lists or price lists for the glass neck tubes was also noted. The respondent cited a tribunal decision to support their stance.

Justification for Penalty Imposition:
Upon careful consideration, the tribunal found that the glass neck tubes were indeed removed without following excise formalities, leading to the duty liability issue. It was observed that the appellant had not submitted necessary documents related to the glass neck tubes. The tribunal acknowledged that the appellants had taken Modvat credit on the full quantity, including the value of glass shells, but still reduced the penalty from Rs. 1,00,000 to Rs. 50,000, considering the circumstances of the case. The tribunal upheld the duty demand but reduced the penalty amount based on the arguments presented by both sides.

In conclusion, the tribunal confirmed the duty demand but reduced the penalty imposed under Rule 173Q from Rs. 1,00,000 to Rs. 50,000. The appeal was rejected except for the penalty reduction.