2017 (3) TMI 414 - AT - Central Excise

Penalty u/r 173Q - Held that - in the first round of litigation there was no penalty imposed under Rule, 173Q against which no appeal was filed by the Revenue therefore in the impugned order imposition of penalty under Section 173Q is incorrect therefore same is dropped. Imposition of penalty on partners - appellant claim that penalties on partners are unwarranted as the issue involved is of interpretation of SSI exemption and quantification of duty - Held that - the appellant were required to pay duty after the limit of SSI exemption but they have not discharged duty and goods were cleared clandestinely therefore the partners who are solely responsible for activity of the partnership firm are liable for penalty. However taking into consideration overall facts of the case we find that the partners deserve for some leniency accordingly we reduce personal penalty imposed on the partners from ₹ 2 Lacs each to ₹ 1 Lac each. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Duty demand for clearance of goods without payment.
2. Clubbing clearance of units for duty calculation.
3. Extended period for demand invocation.
4. Re-working duty with deductions.
5. Modvat credit adjustment.
6. Quantum of penalty determination.
7. Confiscation aspect consideration.
8. SSI exemption allowance.
9. Imposition of penalty under Rule 173Q.
10. Waiver of penalty on partners.

Analysis:
1. The case involved the appellant engaged in furniture manufacturing without Central Excise registration, leading to goods clearance without duty payment. Officers conducted a search, seized documents, and issued a show cause notice for duty demand. The Tribunal remanded the case, directing clubbing of units for duty calculation and re-working duty with deductions. The matter was challenged in the Supreme Court, which allowed proceedings to continue before the Commissioner of Central Excise for denovo adjudication.

2. The appellant contested the denial of SSI exemption for certain periods and imposition of penalties under Rule 173Q. The appellant argued against penalty imposition citing no suppression of facts or intentional duty evasion. The Tribunal found finality on the dutiability of furniture but remanded the issue of SSI exemption for 1992-93 to consider aggregate clearance values. The cum duty benefit was extended for subsequent periods, and penalties under Rule 173Q were dropped due to no prior proposal or imposition in the first round.

3. The Tribunal observed that the adjudicating authority failed to consider aggregate values for SSI exemption eligibility in 1992-93, leading to a remand for re-consideration. The cum duty benefit was correctly extended for later periods, and penalties under Rule 173Q were deemed incorrect due to lack of prior proposal or imposition. Personal penalties on partners were reduced considering the overall circumstances, with the impugned order being modified accordingly. The appeals were disposed of based on the above analysis.