2019 (9) TMI 643 - AT - Central Excise

100% EOU - Clandestine removal - diversion of goods to DTA instead of EOU - penalty u/r 25 of Central Excise Rules 2002 - HELD THAT - As per facts of the case it is not case of clandestine removal as the appellant have cleared goods initially which was meant for another EOU and clearances was made ARE-3 against CT-3 certificate. It is only due to the cancellation of the order the appellant was compelled to divert the goods to DTA for which necessary permission was obtained from the Deputy Commissioner therefore there is no malafide intention on the part of the appellant. Penalty cannot be upheld - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand raised on clearances of goods to DTA after diversion from EOU.
2. Imposition of penalty under Rule 25 of Central Excise Rules, 2002 instead of section 11AC.
3. Appeal by Revenue seeking imposition of penalty under section 11AC.

Analysis:
1. The case involved the appellant, a 100% EOU, who diverted goods to DTA after an order cancellation, with permission from the Deputy Commissioner. A demand of &8377; 2,44,36,542/- was confirmed on clearances to DTA, with a penalty of &8377; 60 Lakhs under Rule 25 imposed by the adjudicating authority. The Revenue appealed seeking a penalty equal to the duty under section 11AC.

2. The Revenue's appeal was presented by Ms. Nitina Nagori, Ld. Joint Commissioner (AR), while no representation was made by the respondent. Despite the notice sent, the respondent was not available at the given address, leading to the appeal being taken up for disposal.

3. Upon careful consideration of submissions and records, it was found that the diversion of goods from EOU to DTA was not a case of clandestine removal. The diversion occurred due to the cancellation of the order, with necessary permission obtained from the Deputy Commissioner. The absence of malafide intention on the appellant's part was noted. The Ld. Commissioner imposed a penalty of &8377; 60 Lakhs under Rule 25, providing detailed reasons for not applying the penalty under section 11AC. The Tribunal upheld the Ld. Commissioner's findings, dismissing the Revenue's appeal.

This judgment emphasizes the importance of intention and permission in cases of diversion of goods, distinguishing between penalties under different rules and sections based on the circumstances of the case.