2014 (2) TMI 819 - AT - Central Excise

Setting aside of penalty under Rule 209A of Central Excise Rules, 1994 for non confiscation of goods - demand of duty with interest and penalty was confirmed earlier - Held that - nowhere in the show-cause notice nor in the adjudication order, proposal for confiscation of the impugned goods has been made. Without any proposal for confiscation, penalty under Rule 209A of the Central Excise Rules, 1944 is not imposable. - order of penalty set aside - Decided in favor of assessee.

Summary

Issues:
Appeal against dropping penalty under Rule 209A of Central Excise Rules, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI concerned the imposition of a penalty on the respondent under Rule 209A of the Central Excise Rules, 1994, which was dropped in the impugned order. The case revolved around a Sewage treatment Plant installed by the respondent through a contract with M/s Aqua Chemicals and Systems. The department contended that as the plant was movable goods, duty was liable to be paid. Proceedings were initiated against both M/s Aqua Chemicals and Systems and the respondent, resulting in a confirmed duty demand, interest, and penalty imposition on Aqua Chemicals and System (Mfg.) Ltd. The penalty of Rs. 23,55,000/- was specifically imposed on the respondent under Rule 209A.

Upon appeal, the Commissioner (Appeals) set aside the penalty on the grounds that the goods were not proposed for confiscation as per the show-cause notice or the order-in-original. The Commissioner also set aside the adjudication order. The Revenue appealed this decision, arguing that the Commissioner should have restricted the order only to the respondent, as the penalty was imposed on both M/s Aqua Chemicals & Systems and the respondent.

After hearing both sides, the Appellate Tribunal allowed the appeal by setting aside the impugned order passed by the Commissioner of Central Excise, Pune regarding M/s Aqua Chemicals & Systems. The Tribunal noted that there was no proposal for confiscation of the goods in the show-cause notice or the adjudication order. Without such a proposal, penalty under Rule 209A was deemed not imposable. Consequently, the Tribunal confirmed the dropping of the penalty against the respondent and modified the impugned order accordingly. The appeal was disposed of with these observations.